Your Double Digit Interest Rates Need to Go

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Most people start paying down debt by starting with the thing they owe the least amount of money on. And that makes sense; it's super easy to see quick results, and can be a powerful way to motivate yourself to stick to your new financial habits. If that is the most soul-supportive, nourishing way to get started, keep going. Do not change your habits just because of a best practice. 

If you are interested in changing, or haven't started yet, many financial advisors instead recommend to start with your debt that has a double-digit interest rate attached to it. Why? That's because these loans are going to keep you in debt more quickly than others, and can easily balloon into a number that's unbearable. You can get a better return on your investment to pay this debt by tackling these, because not only will you still decrease the overall debt you owe, your long-term debt timeline will be significantly shorter. 

Debt with lower, single-digit interest rates will generate more debt less quickly, so you have a bit of time to tackle those next. Start with the big ones, and move on. Debt with double-digit interest rates tends to be credit cards, and debt with lower interest rates tend to be student loans, mortgages, etc. We recommend making a list of all your current debt, and the interest rate, to help get a better sense of what you'll owe today – and tomorrow.

Photo by Cristian Newman on Unsplash.

Nicole Cardoza