Pay off the debt with the highest interest rate first seems like simple advice that most people should be able to follow. People are too eager to believe claims about how dumb most people are. Rules about “the total value of all vehicles” seem pointless and distracting.
Pay off the debt with the highest interest rate first seems like simple advice that most people should be able to follow.
Agreed. But the argument for paying off smaller debts first isn’t that comparing interest rates is confusing, it’s that the experience of retiring debts is motivating and you want to get some wins sooner.
Rules about “the total value of all vehicles” seem pointless and distracting.
I think you might not be aware of how much Americans tend to put into cars and other vehicles. People commonly get themselves into situations where their car payments are on the same scale is rent.
I think you might not be aware of how much Americans tend to put into cars and other vehicles. People commonly get themselves into situations where their car payments are on the same scale is rent.
Particularly in rural area, pickup trucks and boats (eg. bass fishing boats) are a major form of intrasexual competition and showing off. (Look up the high end, or even just the average sales price, of a Ford F150 pickup truck.)
Agreed. But the argument for paying off smaller debts first, isn’t that comparing interest rates is confusing, it’s that the experience of retiring debts is motivating and you want to get some wins sooner.
If you are aware of how much paying off part of a debt reduces the interest you pay every year, paying off part of a high-interest debt should be more motivating then paying off part of a low-interest debt.
I’m sure there are free spreadsheet templates where you can put in all of your debts to see the total interest you pay and how much paying off a certain part reduces it. I think most people are capable of finding such a template, and if they aren’t, they’re still capable of using one, so it would be more helpful to point them to one then to tell them to pay off smaller debts first.
Pay off the debt with the highest interest rate first seems like simple advice that most people should be able to follow. People are too eager to believe claims about how dumb most people are. Rules about “the total value of all vehicles” seem pointless and distracting.
Agreed. But the argument for paying off smaller debts first isn’t that comparing interest rates is confusing, it’s that the experience of retiring debts is motivating and you want to get some wins sooner.
I think you might not be aware of how much Americans tend to put into cars and other vehicles. People commonly get themselves into situations where their car payments are on the same scale is rent.
Particularly in rural area, pickup trucks and boats (eg. bass fishing boats) are a major form of intrasexual competition and showing off. (Look up the high end, or even just the average sales price, of a Ford F150 pickup truck.)
If you are aware of how much paying off part of a debt reduces the interest you pay every year, paying off part of a high-interest debt should be more motivating then paying off part of a low-interest debt.
I’m sure there are free spreadsheet templates where you can put in all of your debts to see the total interest you pay and how much paying off a certain part reduces it. I think most people are capable of finding such a template, and if they aren’t, they’re still capable of using one, so it would be more helpful to point them to one then to tell them to pay off smaller debts first.