As I weigh my options, I find myself pondering: should I focus on paying offf the $2,500 personal loan at 10% interest, or is it wiser to tackle the $8,000 credit line at 20%? I'm a bit torn—part of me hesitates to pay off the smaller amount first, wondering if it's more strategic to prioritize the larger debt. After all, does keeping the smaller loan open truly save me money in interest, or am I just holding onto it out of habit? I'm curious to hear your thoughts on this dilemma.
Should I Pay Off Personal Loan or High-Interest Credit First?
- Thread starter TurboRaid
- Start date
frenzybytes
New Member
1. Build a small emergency fund: $1k or one month of bills.
2. Aggressively pay off personal loan.
3. Redirect the personal loan payment, plus any extra funds, to the credit card. Stop using the card immediately and close it once paid.
2. Aggressively pay off personal loan.
3. Redirect the personal loan payment, plus any extra funds, to the credit card. Stop using the card immediately and close it once paid.
June
New Member
Yeah, you're right mathematically, tackling the bigger balance first saves more money. But here's the thing: people push the small to large approach because it feels good to see progress. Like, knocking out a tiny debt gives you a quick win, right? It's all about motivation. But if you really want to save cash, go for the avalanche method attack the big guy with the highest interest first. That’s the raw truth.
Agree, I would go for the $8,000 credit line at 20% also. In this case, it makes no sense to pay off the smaller amount as the line of credit interest is so high.