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Which Debts Should You Pay Off First?

Written by Shelly Evans

debt-consolidationWhen things get out of hand and you find yourself buried under a mountain of debts, making payments on everything all at once is no longer an option.

It is important to manage your debt intelligently, pay off certain debts first and find ways to reduce the possibility of the debt growing. Take into consideration the many types of debt you have, and create a plan for paying them back to the best of your ability. Here are a few tips to consider.

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Which debts are most important?

Start prioritizing. Some overdue debts pose larger risks than others. The most important debt to prioritize is mortgage on your home. Not keeping up with payments can be devastating both financially and emotionally. And since this is most likely your largest debt, paying it off will save you the most money in the long run. (See Ways To Protect From Foreclosure And Default Of Other Home Loans)

If you’re using your home as collateral, make sure to pay consistently so you will not lose your property. A car loan is also important if you need the vehicle for work or school. The more expensive the debt, the more important it is to pay it off as soon as possible. The more expensive debts cost the most in the long run, making it even harder to get out of debt.

Credit cards should also be paid because interest build up quickly. But missing a payment on your credit card is not as catastrophic as missing several payments on your home. That said, missing any type of payment is going to be harmful to your credit report.

If you must put off some debts until your situation improves, a school loan can often be deferred or lowered on a temporary basis.

Keep in mind that even if you cannot pay all your debts at once, you should try your best to pay the debt that is low priority. This helps manage the interest from building up.

Lowering your debt

If it seems impossible that you’d be able to afford all your debts within a reasonable amount of time, it may be time to seek financial help in the form of non-profit help center.

Debt consolidators sometimes buy your debts from the lender and help you come up with a single payment to make on several debts at once.

On a smaller scale, it is possible to get a low interest credit card and transfer debts in order to save money on interests. This method helps make smaller payments on the overall debt and interest by the time the debt is paid off.

In the end, the most important thing is that you work towards eliminating debts from your list. Once you have paid the essentials, do your best to start paying off the rest.

About the author

Shelly Evans

Shelly Evans is a freelance writer and loan consultant. She specialize in writing articles about obtaining financing despite having bad credit. She has more than 16 years in consumer credit and collections and 4 years in business financing.


  • I’ve always been taught that paying off debts with the highest interest should be my priority. I never thought of using a low interest credit card to transfer debts to.

  • When deciding which debts to pay off, is it more important to consider the principle or the interest rate?

  • Glad I found this article. I just graduated last Spring and I’m rushing to find a job that will allow me to be able to payoff my student loans and other debts.

  • Hi Bo,

    Great that you liked our article. Wishing you luck on your job hunting! Here’s a quote I would like to share “Choose a job you LOVE and you never have to work a day in your life”



  • It’s true that people who have a loan and have their house or any other important thing as collateral, it’s best to pay that off first. Right now I only really have college debts to pay back, and I am paying what I can every month. If I had to pay for anything else, I’d probably focus on more important things, student debt can be paid and will be paid eventually, it’ll just take some time.

  • The thing I paid off first was my student debt as I don’t have any other major debts to pay off. I have only taken out one loan and that was paid off some time ago. I have never taken out anything against my house as collateral, so I’m very safe in that regard. I know if I ever do take out a loan and put my house as collateral is that I will pay that off first and foremost.

  • Anything for collateral is the obvious important thing to pay off first. I know people who put their car, house, and even expensive collections of things up as collateral. And they usually always lose it because they focus on other debts to pay off. It’s priority to pay off debts that could in turn cause you to lose something if you don’t finish paying.

  • It’s true Stephanie. Picking and choosing is what priorities are all about and soon you will be debt free. Thanks for sharing your thoughts.

    Have a good day!


  • From what I gathered, any debt that involved a large sum, like a home or a car, should take priority over that card you used to buy that $1500 family room set? That makes sense to me! The bigger debts are the ones you don’t want to lose and the ones that would be the most damaging to scores. When we think of necessities, a roof over your head is number one along side clean water and food. Electricity, internet, furniture, and even your car is not something that is absolutely needed.

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