Читать книгу Personal Finance in Your 20s & 30s For Dummies - Eric Tyson - Страница 60

If you’ve been reading this chapter from the beginning, you know that I discuss numerous strategies for zapping your consumer debt. Now I take the discussion to a deeper level. How do you handle paying down multiple consumer-debt balances? It’s really pretty simple after you implement the advice I give up until this point in the chapter.

After meeting the minimum required monthly payment terms for each loan, I strongly advocate that you channel extra payments toward paying down those loans with the highest interest rates first. The financial benefit of doing so should be obvious. If you have one loan at a 15 percent annual interest cost and another at an 8 percent annual interest cost, you’ll be saving yourself a 7 percent annual interest cost by paying down the higher-cost loan faster.

I’m amazed at the wrong-headed advice I continue to see on this topic, especially on the Internet. One guru with no discernible training in the financial-planning/personal-finance field advises that you rank your debt payments by their total outstanding balances and that you channel extra payments to those with the lowest total balance owed. The “theory” behind this is that the psychological boost from paying down smaller debts completely will lead you to keep paying down your other debts.

In my real-world experience as a financial counselor, I’ve found folks to be intelligent and more responsive to the psychological rewards of saving money. And you best save money by paying down your highest-interest debts first.