- This topic is empty.
March 18, 2023 at 6:52 pm #80254Alicia
I can’t help but feel like I am doing it completely wrong but for us limiting what we pay a month is more crucial right now than paying more in the long run. Our daycare is about to get even higher and I’m trying to prepare.
A little back story..I was in a MVA in November which set us back tremendously. The insurance has been horrible to deal with and it took the other driver weeks to accept liability. I will be getting a settlement sometime this spring/summer once all my medical is dealt with and plan on paying off as much as I can.
Would you continue to pay off smaller balances and limit monthly expenses or switch and pay off higher interest rates? My one card that could be paid off in a few months has the lowest interest rate on it. I can switch focus to another card with double the balance and higher interest but it won’t be paid off until probably June or JulyMarch 18, 2023 at 6:53 pm #80255Abby
When we started debt payoff, we did smallest balance 1st. Store cards that had relatively low balances. Now that those are long gone, we’ve switched to interest rate. When the next one is paid off, we’re going to look at list again and reevaluate. It’s an ever turning door for us.March 18, 2023 at 6:53 pm #80256Naudja
I pay off debt by balance not interest rates.March 18, 2023 at 6:53 pm #80257Angie
I recently went through a very similar situation. In 2018 I was in a devastating car accident that caused an enormous amount of debt and a lifelong disability. I received my settlement in October and it covered all my medical bills thank God! And left me with enough it pay off my vehicle, and put a 20% down payment on my home I just bought.
However the process before getting my settlement was extremely ugly. I had debt collectors calling me every hour, I had full blown panic attacks and thought I would never get out of the financial hole I was in. During most of my recovery time I ended up using all my savings including my 401k. And credit cards.
I was in such a dark hole financially and emotionally I almost didn’t make it through.
During my darkest time I just paid what I could. My lawyer kept telling me it would be taken care of in the end and Thankfully it was. Sorry I just realized I went on a rant and didn’t really answer your question. Just pay what you can and then once your settlement comes through pay off every thing else.March 18, 2023 at 6:54 pm #80258Alicia
There’s never a wrong way to pay off debt. It’s always personal. Sometimes emotional debt has to be first to get mental relief. Sometimes it’s lowest balance, sometimes higher interest, sometimes it’s cash flow needed so the highest monthly payment. Do what is best for you and your family, not what is best for someone else.March 18, 2023 at 6:54 pm #80259Rebecca
Psychologically, it’s easier to pay off the smallest balance, then use the extra money from not having that payment on the next smallest balance.
So whatever works for you, use it. You’re more likely to succeed.March 18, 2023 at 6:54 pm #80260Sarah
We just used taxes to pay off a debt with the largest monthly payment because the payment was the biggest problem at the moment.March 18, 2023 at 6:54 pm #80261Rebecca
The method that is going to keep you on a plan, and keep your 4 walls running smooth on a day to day basis is the best plan.
Yes long term is important long term, but if you can’t keep your 4 walls sane then long term isn’t going to feel achievable.March 18, 2023 at 6:55 pm #80262Sarah
Just like your budget is a living thing that grows, changes, and adapts, so too should be your debt payoff journey. Minimal balances that can be banged out in a few months or less? Go ahead and free up that money. You can go back to highest interest first if you choose or continue sticking with lowest payment first. Make it work for you so that you can survive and also keep going.
All that matters here is that you do what’s best for you in order to ensure that you keep going.March 18, 2023 at 6:55 pm #80263Rebecca
I paid lowest balance first I was advised to pay highest interest first it jus did not work for me. I liked paying lower balance because I felt accomplished something. There are websites that can calculate it for you. You need to do. What works for you.