Which debt should I pay down first?

Snowball method

Focus on your smallest debt. The goal is to get rid of it as soon as possible.

You keep on making the minimum payments on all of your debts, and you put any extra funds you have toward paying off the smallest debt. This will help you pay it off sooner.

Once you’ve paid one smaller debt in full, dedicate that freed up money to the next smallest debt. This way, you create a “snowball” of payments as you eliminate each debt. Unlike the higher interest rate method, you’ll see progress quickly as you pay off smaller debts.

However, you may end up paying more in the long run, as you won’t be focusing on the larger or more costly debts. 

Topics: debt, money