Formulate a Financial Plan

Know Your Net Worth

Manage & Minimize Debt

Accumulate Assets

Budget to Live Within Your Means

Understand Investing Basics

Plan for Retirement

Insure People & Property

Deal with Financial Advisors

Review Your Employment Contract

Make Plans for Your Estate

Make Good Decisions


The simple answer is that you should pay off those debts that carry the highest interest rates.

In practice, however, it may not be as simple as looking up the listed interest rate because some debt allows you tax deductions, which reduce the effective cost of that debt. For example, you may be eligible for deductions on student loan and mortgage interest payments. The amount of the deduction may depend on your income, filing status, and whether you itemize deductions or claim the standard deduction.

Some sites recommend paying off the loan with the lowest outstanding balance first. The justification for this is psychological, under the belief that successfully paying off one (low-balance) loan will inspire and motivate the consumer to keep paying off the others. I cannot in good conscience recommend this path because it means you will end up paying more interest compared to the best approach, which is to pay off the highest interest-rate loan first.