Which debt to pay off first?

[akapulika]

Long time lurker but 1st time poster and I am asking for some advice on what you would do in this situation. I have about 15k to pay off some debts, which one would you pay off first and why?

Here's what i owe:
Mortgage: 15 year fixed 5.875% rate= $120k remaining (original loan 130k, 13.4 years left)
Student Loan: 30 year 4.75% rate=21k remaining (original loan 90k, 27 years left)
Car 1: 5 year 3.85% rate=31k remaining (original loan 32k, 58 months remaining)
Car 2: 4 year 2.90% rate=9k remaining (original loan 25k, 19 months remaining)

I finished school about 3 years ago and have been very aggressive in paying off my student loans. However, should i be aggressively be paying down my mortgage since the rate is the highest? Common sense would tell me yes, but self fullfillment would be for me to pay off my student loans first. What do you think?

Thanks for your advice!

[goldie]

Long time lurker but 1st time poster and I am asking for some advice on what you would do in this situation. I have about 15k to pay off some debts, which one would you pay off first and why?

Here's what i owe:
Mortgage: 15 year fixed 5.875% rate= $120k remaining (original loan 130k, 13.4 years left)
Student Loan: 30 year 4.75% rate=21k remaining (original loan 90k, 27 years left)
Car 1: 5 year 3.85% rate=31k remaining (original loan 32k, 58 months remaining)
Car 2: 4 year 2.90% rate=9k remaining (original loan 25k, 19 months remaining)

I finished school about 3 years ago and have been very aggressive in paying off my student loans. However, should i be aggressively be paying down my mortgage since the rate is the highest? Common sense would tell me yes, but self fullfillment would be for me to pay off my student loans first. What do you think?

Thanks for your advice!

Have you read any of the Dave Ramsey books? He talks about a debt snowball and its quite a great idea if you can do it.

[jakelabry]

I would go at the student loan debt first! That can get ugly because there is absolutely no way to discharge it should things go south on you. I believe that is also what Dave Ramsey would say.

[samruba]

if I were you, I would sell both the cars and will not pay 40k plus interest on it. I will buy two (assuming you need two cars: one for you and one for your spouse) used and reliable cars. After that, once I have enough emergency savings for 6-8 months (including your 15k) I will pay as much money as I can towards my mortgage because I am paying higher interest on it.

[goldie]

I would go at the student loan debt first! That can get ugly because there is absolutely no way to discharge it should things go south on you. I believe that is also what Dave Ramsey would say.

I would have guessed the cars first - lol.

[jakelabry]

I would have guessed the cars first - lol.

From his web site:

"You need to take care of the student loans before you do anything because if you don’t, you’re going to look up 25 years from now and those student loans will still be lying around. You’ve got to make them a big deal and knock them out."

Although, I think he would recommend dumping the cars also and replacing them with paid for clunkers.

[Fred Esterly]

The best way to get rid of debt, experts agree, is to attack the balance with the highest annual percentage rate first. When that one is paid off, move onto the debt with the next-highest interest rate.

[deelightfull]

Me personally, I would go after the second car loan--it's just within reach!! And then I WOULD NOT snow ball all of that into the student loan, I'd make sure that I was saving into a new car fund. Once that's rolling, I'd tackle the student loans before the 1st car. The balance is less, and the the nature of the debt, makes me lean that way. That's just me.

I see to remember that the while the "experts" acknowledge that financially, it makes sense to go after the highest interest rate first, psychologically it makes sense to go after the smallest loan balance first, and achieve a victory to keep you rolling. My two cents...

[Ready2Run]

The mortgage interest and possibly some of the student loan interest is tax deductible. With that said my first instinct would be to pay down and hopefully soon pay off the student loans since those never go away. Other than that I might pay off the 2nd car, not really to save but to simply and then put the rest towards the Student loans. The mortgage would be last which ever way simply because it's tax deductible interest.

[kriptik]

Ha! lot of Dave Ramsey follers here! ME TO!! Start with the one that you can pay off the quickest. Then roll that money to the next one you can pay off the quickest and soo on. It's called the debt snowball. Works great!

[eally]

Long time lurker but 1st time poster and I am asking for some advice on what you would do in this situation. I have about 15k to pay off some debts, which one would you pay off first and why?

Here's what i owe:
Mortgage: 15 year fixed 5.875% rate= $120k remaining (original loan 130k, 13.4 years left)
Student Loan: 30 year 4.75% rate=21k remaining (original loan 90k, 27 years left)
Car 1: 5 year 3.85% rate=31k remaining (original loan 32k, 58 months remaining)
Car 2: 4 year 2.90% rate=9k remaining (original loan 25k, 19 months remaining)

I finished school about 3 years ago and have been very aggressive in paying off my student loans. However, should i be aggressively be paying down my mortgage since the rate is the highest? Common sense would tell me yes, but self fullfillment would be for me to pay off my student loans first. What do you think?

Thanks for your advice!

heyy akapulika!!!
i would recommend you to pay off your second car loan first.Though i know it has the lowest interest rate and lowest amount remaining but cutting the list off will greatly motivate you to pay off your remaining loans.A recent survey has shown that paying off small-2 loans first boost up the debtor to pay off the remaining debts.