Question: Does anyone have a mathematical formula for debt reduction? I’m trying to decide whether to pay of a credit card, time-share loan, or home equity loan first. I don’t want to pay for a service to figure this for me. I want to do it myself.
Answer: There is no single mathematical formula to determine such a think. What you need to do is look at each debt separately. Get the payoff amount on each of your debts and the amount of interest you still owe then simply do the comparison. In general, all you really have to do is look at the interest rate on each loan. The debts where you pay the higher interest should be paid off first. A formula won’t help you determine that.
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