Reply to How to spend an unexpected student loan refund

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Put it all towards your highest interest rate credit card.[/quote]

She will never pay it off this way.

Pay off the smallest balances first, then when those get paid off dump that money into the next smallest balance.

Rinse, repeat.

The Dave Ramsey method is the one that works.

Making payments on the highest interest card first almost guarantees she will never make it out of debt.[/quote]

Mathematically, paying off the highest interest rates first means she/he will pay the least amount on the loans.  The Dave Ramsey method works best if the psychological boost of "yay!  I paid off one CC" is needed to keep the debtor motivated.  That is fine.  I know first had that paying off the highest interest rate works too, and saves money.  It was the approach I took to my student loans.  To each his/her own.  [/quote]

Most people in $40K credit card debt need to "motivation" of paying things off.  If they were able to understand the numbers of "paying off higher interest first is better" they likely would not be $40K in debt (IMO).  
[/quote]

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