What’s the best way to pay off student loans? Q&A

Hi professor,

Congrats on your debt free journey!! That must be great feelings to have.

I’m curious about what’s your method to pay off the debts. We have student loans and credit card debts (no car loans thank god). I want to pay off our credit cards first then student loans Which of these three method you use?

1. Pay off smaller balance and work way up

2. Pay off the highest interest rate first

3. Debt consolidation on one interest rate.

Thank You.

Good morning!

First off, thanks for the congrats! We’re so excited to have reached this goal.

The answer to your question:

We paid smallest balance first.

The method is called the Debt Snowball. Essentially, pay minimum payments on everything except the smallest debt, and throw every penny you can find at that smallest debt. When it’s gone, move on to the next smallest.

Why?

Because the emotional victory of “checking one off” will help you stay motivated. For us, 2.5 years only sounds short in hindsight. It was a grind and it took perseverance. I am sure we would have moved slower, and paid more interest, if we tried the “highest interest first” approach.

This is also why we chose not to consolidate.

Consolidation gives you one giant mountain to conquer instead of a bunch of smaller ones. I’d rather not make Everest my first climb ever. We benefited from moving up in challenge by tackling progressively larger and larger debts.

To sum up: we paid off the smallest debt first and worked our way up. So glad we did.

Have a great weekend!

Dr. F

Let’s Connect!

Related Posts