[SteveR]

Quote:

Originally Posted by Peter76 So, how about if, instead, you keep sending money only to your highest after-tax debt, and just focus on your total debt outstanding, and seeing it drop? That way, you can still get some warm fuzzies at seeing your debt drop by 10%/20%/30%, as well as maximizing your net worth. Or, how about focusing on the amount in interest that you're saving by paying off the high rate debt first, rather than looking at the balances/debts left? --Peter

The way I see it is, reduce (eliminate) the highest non-deductable debt first. Debt from a home equity loan would be way down the list but CC debt would be at the top. Car loans maybe next followed by student loans and then any other loans that you can't deduct the interest paid. The interest rate and amount as you said, would then dictate which to pay on the most until it is gone.

The "good" interest loans like the home equity and investment loans would go last. Mortgages sort of fall near the bottom but it all depends on where you are in the loan as well as your overall tax situation. Each person might need to do it differently based on their personal circumstances.

Personal experience note: after my divorce, I was granted the task to pay off all the CC debt my wife had run up. It was a staggering amount and was spread over many CC and individual store CCs. The total number of accounts was like 15-20. I was also paying alimony and child support at the time and was rasing one for the two kids myself. No money in the bank and everything still had a credit balance. :P

I put together a plan to pay off all this crap while still keeping a roof over my head and food on the table. CC credit sucks... and can drag you deeper and deeper in the hole. It took 3+ years to climb out and I have not carried a CC balance in over 15 years. That is also when I got serious about saving and investing.