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Ask Dave

Why Smallest Debt First?

Dave says that paying off debts by smallest balance first, and not highest interest rate, is not all about math.

QUESTION: Courtney asks why pay off the debt with the smallest balance instead of the debt with the highest interest rate.

ANSWER: It’s not all about math!

We list debts in the debt snowball in order of the smallest to the largest balance, putting as much as possible toward the smallest while paying the minimum payments on the others.  The reason we do this is for behavior modification.  It helps you see yourself making a dent in your debts.  If you’re going to change habits, you have to see some quick results.  Paying off the smallest debt first instead of the debts with the highest interest rates will give you those quick wins that will keep you motivated in the process.