Which Debt Should You Pay off First? – EP 276

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It can get confusing and overwhelming when deciding which debt you should pay off first. In this episode, we talk about finding out the strategy and plan that is the best fit for you. There are standards and nuances where you can change the order of paying your debt so we’re here to talk about both— and you might even find the best one somewhere in the middle of the standard!

The bigger picture in paying off your debt is the small things that you do to pay them off.


  • Debt Free Stories! Our new YouTube series is live and releasing weekly through February. You guys continually ask us for more debt-free story interviews and we are delivering on that in this 10-episode series with listeners just like you who’ve paid off debt in various ways and from a variety of backgrounds. We hope you’ll find it as inspirational as we did! Head to YouTube.com/frugalfriends to catch our episodes and be sure to subscribe and turn on notifications to get updated when every episode drops!

Debt Avalanche vs Debt Snowball

In this article, Investopedia runs down the standard ways to pay off debt in an accelerated way. 

What Jen + Jill have to say:

Debt avalanche involves making minimum payments on all of your outstanding accounts and pay off the bill with the highest interest rate. Jen thinks the pros for debt avalanche is that it saves us hundreds of dollars on interest payments which can also reduce the amount of time it takes to pay off debt by a few months. However, it takes a hefty amount of discipline and commitment to make more than minimum payments and requires a constant amount of ‘discretionary income’. 

On the other hand, ‘debt snowball’ is listing your debts out from smallest amounts to largest amounts–tackling the easy jobs. Jill thinks this builds motivation by settling debts fast and it’s easy to implement. It just incurs more interest and it can take longer to become totally debt free. Just a tip from the Frugal Friends: if you’re an average income earner, you would want to consider investing as early as possible. 

Things to Consider When Prioritizing Which Debts to Pay off First

This article by InCharge affirms the idea that “debt is neutral” by digging deep into the radical middle approach when it comes to considering priorities. 

What Jen + Jill have to say:

There are 4 things to consider when prioritizing which debt one must pay off first, and Jen might not put this one on top but she thinks tax breaks should be on your list. Do not be misled as mortgage interest is only deductible if you itemize deductions and the student loan interest is deductible if you take the standard deduction. Consider interest rates and try to prioritize anything in the double digits immediately (anything 5-9% is secondary and anything under 5% is at your discretion–which can depend on which one you think is best to pay off your debt). 

Consider also your remaining balance as it is accompanied by a sense of accomplishment and motivation if you keep track of them. Jill reminds us that debt should remind us (not all the time) of the consequences of not paying it. 

Lightning Round

For Jill, due to the high interest and most amount of debt, she decided to prioritize paying off her truck loan then school loans. 

Contrary to how Jill decided which to prioritize, Jen decided to focus on paying her car loan first because it was little. Followed by her student loans as it was 6.5% interest (Travis’ were 3-4%). 

Bill of The Week

Thank you Nic for sharing your bill about the mental toll/exhaustion about networking – so sorry for the days it took you to recover!

Thanks so Much for Listening!

Thanks so much for listening! Many of you know we have a private community where we do monthly money challenges and offer accountability groups. We want to congratulate one of our members for a big win:

Practical and relatable insights!

I love this podcast! The hosts give practical and relatable insights and advice. Listening each weeks also keeps me motivated to keep my financial goals! Thanks for the great listen 🙂

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