When people start to take the journey of paying off debt they try to get all scientific about it. They say “Well I have a college degree, so I should synthesize these numbers and put together a debt payoff strategy that most completely displays my intelligence.” Then they go and spend all afternoon putting together an Excel spread sheet that best accomplishes the display. More often than not, that is where the excitement ends.
Keep it simple, there is something extremely psychological about debt.
Don’t let your mind keep you from winning! Pay off the smallest balances first – this way you can have a win right out of the gate. That win gives you an instant blast of peace of mind. You are going to beat debt! Next, pay off the second smallest balance with the payments you were making on the recently paid off loan, and so on until all the debt is gone.
The “Debt Snowball” approach works, plain and simple. There is no high finance involved – don’t even worry about the interest rates! Once you get the ball rolling you will find success like you would not believe. I always envision a Looney Toon's espisode where Wile E. Coyote is rolling down a hill to catch the Road Runner but is rolling so fast that he starts to pick up all kinds of dirt and debris. Do the same thing to your debt - START ROLLING!
Listen, if you still want a spread sheet, you can do that too. But make your first snowball payment before you open Excel.