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A friend of mine has some debt issues, but she recently got a $9K bonus (about $7K after taxes, etc). Here's her financials:

$22K HEL at 10%
$7K car loan (actually transferred from the bank to a 3% starter CC rate that expires in October--she does not know what it will go up to)
$3K on Optima at 18%
$2700 on Chase at 12%
$9K on Discover at 16%

Rates are approximate, but close, as are balances.

I told her I thought she should pay off the Optima, and put the rest on Discover.

She, for reasons I don't understand, wants to pay off the HEL. I told her that's the last thing she should pay off, because it's ultimately got the lowest effective interest rate and is tax deductible. (I suspect that she wants to pay it off, and then transfer some of the cards to it... or just run it up again....).

Am I right? I know she's not right!

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