Credit & Growth · session 4 of 6 · 30 min

Two Ways Out of Debt

Run both payoff orders — smallest-first and highest-rate-first — on the same debts.
Choose one on purpose, knowing what each costs and what each gives.

Three debts, one extra Ⓛ100.00 a month to attack them with. Smallest-first pays the littlest debt off quickly and hands you a win. Highest-rate-first aims the money where the rent is worst and costs the least overall. Both work. The plan that fails is the one you abandon.

The same three debts, two attack orders

Debt	Balance	Smallest-first order	Highest-rate-first order
Store card, worst rate	Ⓛ800.00	2	1
Medical bill, no interest	Ⓛ300.00	1	3
Card, middle rate	Ⓛ2,400.00	3	2

Smallest-first clears the Ⓛ300.00 medical bill in three months — one bill gone, one payment freed. Highest-rate-first sends every spare Ⓛ at the store card, where each month costs the most.

Under smallest-first, the Ⓛ300.00 medical bill gets the extra Ⓛ100.00 each month. With no interest on it, how many months until it is gone?

Work it out, then check

Ⓛ300.00 at Ⓛ100.00 a month is three months. The freed payment then joins the attack on the next debt — that rolling snowball is why the early win has value beyond morale.

This week

List your own debts: balance and rate for each. Write both orders next to them. Pick the order you will actually sustain — and put the first extra payment on the calendar.

Next in Credit & Growth: Shopping for a Loan Without Hurting Yourself →