Personal Finance & Money Stack Exchange
Personal Finance & Money Stack Exchange

Questions tagged [debt-reduction]

The act of paying off debts (either partially or completely). One may do this to lower or eliminate a monthly payment and regain control of one's personal finances. There are different ways to do this, but the most popular are based either on the total amount of each debt or on the interest rate. There are different arguments as to which one is better, but either is better than doing nothing but paying the minimums.

181 questions
201
votes
19 answers

How smart is it to really be 100% debt free?

For the last 2 years, I have been trying hard to be debt free without affecting my personal cash flow. I am by no means a rich person, but I have a decent salary. I still have debt, specifically Education Loans (Interest 3%) Car Loan (Interest…
Geo
  • 5,845
  • 6
  • 29
  • 39
69
votes
11 answers

How can I prepare for my US student debt?

I'm a student at Drexel University. Drexel is a notoriously expensive school, and I pay roughly $35,000/yr in tuition, after awards. What's more, it is a five-year school. Currently, I'm in my fourth year. Throughout the year, I work full time six…
CretaZigman
  • 748
  • 1
  • 5
  • 8
60
votes
12 answers

What should I do with $4,000 cash and High Interest Debt?

I'm receiving a $4,000 gift. I'm going to put $1,000 in an account. Next - with this gift I can pay off a credit card with a 23% APR or I can make a 15% dent in a 26% APR credit card. Do I pay off the 23% or make the dent in the 26%? Considering…
Patti Reiss
  • 571
  • 1
  • 4
  • 6
55
votes
17 answers

Why would anyone want to pay off their debts in a way other than "highest interest" first?

Looking at the math, it is clear to many people that, given a number of debts at different interest rates, if you are trying to eliminate your debt, you will pay less interest overall if you pay off the highest interest rate debt first and work your…
Ben Miller
  • 116,785
  • 31
  • 330
  • 429
48
votes
10 answers

Is paying off your mortage a #1 personal finance priority?

Everyone always says and aims to "pay off my mortgage" But in the current climate of low interest rates is this really worth it? Should that money be put to use earning a higher yield? OR Does the prospect off another 2008 style financial situation…
user37273
  • 489
  • 1
  • 4
  • 3
46
votes
11 answers

Should I take out a personal loan to pay off credit card debt?

My spouse and I have about 40K in credit card debt, in addition to a mortgage payment and student loans. We have been working hard to pay off this debt and have been moving in the right direction. We got approved for a 30K personal loan at a lower…
thumbtackthief
  • 1,264
  • 1
  • 13
  • 16
43
votes
14 answers

Hypothetically, should I pay off the smaller + higher interest rate loan first, or the larger + higher absolute interest cost?

I have this hypothetical situation on my mind and I am not sure which is the best solution. Given: Loan 1: $340,000 at an interest rate of 1.69% per year Loan 2: $40,000 at an interest rate of 3.6% per year I have a fixed amount available to pay…
user99451
  • 441
  • 1
  • 4
  • 6
37
votes
6 answers

Should I pay an extra $100 every month on my mortgage or pay $1200 extra every year at the beginning of the year?

I can pay $1200 extra once a year or $100 every month - which is better? The first one does sound better, but for a 30 year mortgage, is it that significant? Say the mortgage is for $200,000. Thanks.
Anonyms
  • 371
  • 1
  • 3
  • 3
37
votes
9 answers

Getting $10,000 and have $16,000 balance on two credit cards - How to allocate payments?

I'm getting a chunk of money - $10,000. I have 2 credit cards, each with $8,000 on them. Both have the same interest rate. Should I put $5,000 toward each of them? This way, would my monthly bills go down and make it easier to see the light at…
jenna
  • 371
  • 1
  • 3
  • 3
35
votes
13 answers

Why might it be advisable to keep student debt vs. paying it off quickly?

As of a couple weeks ago, I paid off all of my student debt. Hooray... But I have a friend named A who has a friend named B who is a financial advisor (a young so therefore perhaps ignorantly malicious one). B has convinced A that he should take a…
Millie Smith
  • 506
  • 4
  • 9
31
votes
13 answers

Do I pay a zero % loan before another to clear both loans faster?

I have $11,000 to put toward one of my three loans. I think I should pay off the 0% car loan and then in two months it will be zero and I can apply that $635 to the 2.5 % car loan and pay it down faster. Does that make the best money sense? Balance…
AllenH
  • 335
  • 3
  • 3
28
votes
5 answers

What method do I use to pay current expenses while paying off credit card debt?

I’m hoping you can help me with a question that seems very hard to google for some reason. I have $20K in debt on 4 cards, and I have set up a plan to pay off the deferred card on time, and the highest interest after that while still paying minimums…
Chelsea
  • 281
  • 3
  • 4
27
votes
5 answers

Multiple loans, multiple payers - how to snowball fairly

My brother and I both have a large sum of student loan debt. I have more than he does and my interest rates are slightly larger as well. We are both attempting to snowball our debt separately. It occurred to me that we may be able to accelerate…
stu
  • 373
  • 3
  • 5
26
votes
6 answers

Does it make any sense to directly contribute to reducing the US national debt?

As an American citizen, does it make any financial sense to donate money in hopes of helping to reduce the US national debt? Thanks.
Latency
  • 263
  • 2
  • 5
26
votes
8 answers

To pay off a student loan, should I save up a lump sum payoff payment or pay extra each month?

I am a new college graduate with a student loan of $17k at 6.8% interest. The monthly minimum payment due is $193. I have been paying the minimum amount, and then taking that same amount and placing it into a savings account. My original idea was…
Mike M
  • 363
  • 1
  • 3
  • 6
1
2 3
…
12 13