Paying off debt is one of the first things you should focus on before maximizing your savings in pursuit of financial independence.
If you have a lot of different debts, what order should you pay them off?
This questions has left many borrowers scratching their heads, however the large consensus agrees with 2 different approaches- Highest Interest First Strategy and Lowest Balance First Strategy.
Whichever strategy you use, pay as much as you can each month to minimize interest
- Highest Interest Debts First
- This strategy would have you list your debts in descending order of highest interest rate first, lowest last.
- Pay minimum payments on every other debt, and pay all your extra money onto the highest interest debt. Once its paid off, put all extra money onto the second highest interest debt and repeat until all debts are paid off.
- With this method, you avoid the most interest
- Lowest Balance Debts First
- This strategy would have you list your debts in descending order with the lowest balance first and highest balance last.
- Pay minimum payments on every other debt, and pay all your extra money onto the lowest balance debt. Once its paid off, put all extra money onto the second lowest balance debt and repeat until all debts are paid off.
- With this method, you eliminate the smaller monthly minimum payments quickly, allowing you to free up more cash each month to throw at the other debts
- Additionally, you also quickly get a positive reinforcement on your debt attack, further motivating you to destroy the larger debts with a vengeance.
Make a Plan
Whichever method you pick, make a plan of how much you will pay onto the debt each month and the date you plan to have each debt eliminated. It will help to keep you motivated and efficient.

As of September 2020, Mrs. FFR and I have paid off nearly $65k in 18 months and we will be debt free (minus our mortgage) before 2021 – see our progress here.
Our last debt is my student loans which we are waiting until December to pay since federal student loans have interest and payment suspension until January 2021 per the CARES ACT of 2020. We have the money to pay them now, but are making (a small amount of) money in a HYSA until then.
Once all of your debts are gone, you will be entirely focus on savings and investing. Just think of how much more you can save if you cut out your debts- image no car loans, no credit card bills, no student loans, no 401k loans, and no personal loans. Imagine the growth potential. You can do it- get after it and attack!
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