Paying off the lowest interest debt you have can boost your cash flow and provide money needed to start addressing higher-interest debt or put together an emergency fund.Photo by The Comedian.
The Simple Dollar suggests that eliminating low-interest debt first puts you in a better position to choose what to do next: pay off or tread water on other debt, plan for emergencies, or save and invest. Increasing cash flow offers more options.
Conventional wisdom says you should pay off the debt that costs the most first and then use the “snowball method” to pay off lower-interest debt, but cash on-hand is important too. What do you think: do you pay off low-interest or high-interest debt first? Share your tips in the comments.
Why Should I Hurry to Pay Off Low Interest Debts? [The Simple Dollar]