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Author: FlippoHip Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308688  
Subject: Interest Rate V. Amount owed Date: 8/23/2012 11:25 AM
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My last post brought up the debate about whether the interest rate is significant when deciding whether to pay off highest debt first or lowest debt first when the rates are only a point apart.

Here is what I came up to (I'm not comfortable putting my exact debts on a public forum)

Smaller debt = (10.9%)
Pay minimum until paid off: total interest $1162
Pay large chunks and pay it off quickly: total interest $308

Larger debt = (9.9%)
Pay minimum until paid off, total interest paid $6951
Pay large chunks and pay it off quickly: total interest $1329

So, the interest rate really isn't a factor here. The amount of the debt negates the importance of the rate.

Even if the rate of the small one was 12%, the total for paying it off quickly would only be $342.

If it was 19% it would still only be $566.

So, I have decided that paying off the big one, even with the lower rate, will be better in the long run, and it will make me feel better to see this large number drop.

Thanks everyone for the inputs. It really made me think it all through.
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