Quote:
Originally Posted by DebbieL
I purposely made the sample that way to get the point across. If it should be obvious which to pay off first with the amounts equal, it is just as obvious with the amounts unequal. The CC paid off first will get you out of debt quicker and with less cost - no matter what the numbers are. I don't care if the other debts add up to only $5,000 or if they add up to $50,000 - it is irrelevant. Logically the best choice is always to pay off the highest interest first - period.
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Logical and money don't mixed for most people......or people wouldn't be in debt....something to think about.
Example: I want a new car. It is $30,000. I don't have $30K. Logical reasoning would not buy the car, but I really want this car, so I put it on a CC and now in debt to my eye balls. This is my point, people don't usually think logically when dealing with money. If they were thinking logically then they would have known that they did not have the cash and therefore would not buy the car.
Now money and behavior/emotion....now that's a match made in heaven. That is why my point toward paying down CC from lowest balance to highest w/o worrying about the interest rates. If the person is attacking their debts hard then the extra interest is not going to amount to much anyway since that debt will be paid for soon. It really is 20% math and 80% behavior.