Highest rate first.

Dave only says that so people can see material progress and play mental games to win. Unless you want/need that, the best route is highest interest first.

>Dave Ramsey says to pay the smallest debt first, but my $16,000 loan has an 18% interest rate, my student loan only has a 5% interest rate

Dave Ramsey is good for people that are clueless, have poor self-motivation, and need some direction. He says that so they can see progress, and because they are usually bad at math (otherwise they wouldn't be in dire straights and needing his guidance to begin with)

Paying a 5% loan down before an 18% loan is financial suicide

Pay the student loan down ASAP. As much as you can possibly afford every month

If you care about money, always pay off the debt with the highest interest rate while paying the minimum on all others.

If you don't care about money, do whatever brings you the most joy.

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>Dave Ramsey says to pay the smallest debt first

Dave Ramsey says a lot of stupid things. He also says you can expect to get a 12% return on investments.

He does this to encourage people to save and invest. I applaud the goals. It's a shame he feels the need to lie in order to encourage his listeners. I prefer to tell people the truth.

Normally it wouldn’t make a ton of difference but the 16k loan is triple the rate. Please pay that first, and fast.

Financially, it makes more sense to attack the loan with the highest interest rate first. In your case, this is also the loan with the highest balance. If you are a disciplined person, that's the loan you should first pay down with every available dollar you can spare--this will save you the greatest amount of money (in interest).

Psychologically, it can be more helpful to attack the loan with the smallest balance first. In your case, this is the loan with the lowest interest rate. If you lack discipline and/or need motivation to eliminate all your debts, seeing one loan balance finally drop to zero can give you a significant emotional boost to keep going and attack another loan balance in kind. For some people--particularly those with many outstanding debts--this mental edge is what keeps them going until all their debts are finally paid in full.

So, which loan should you attack first? Well, how disciplined are you?

Dave is wrong, from a financial perspective. You sound like you're fully aware of the problem with your debt. So you should tackle it head on by paying off the highest interest debt first.

The only people who should follow Dave's approach are the very ignorant and/or financially immature people who are only motivated to keep paying off their debt by seeing one of their accounts go to zero and feeling good about it.

Debt snowball. Highest interest rate first. However, i remember correctly, aren't interest rates frozen due to biden? If that is the case, throw every dollar at the largest principle.

Snowballing (assuming a mininum payment of $235 on the SL and $400 on the PL + an additional $500/mo) would result in a total interest paid of $9,037

Avalanche method of paying highest interest first would mean $3,968 would be paid in interest.

No brainer to me. You pay down the 18% interest loan first. You're paying nearly 4x the interest on that debt. Paying the student loan first will free up some monthly cashflow, but will cost you much more in interest in the long run. The only motivation to do that is if you're struggling to make your payments every month.

Mathematically hitting the higher interest loan saves you the most money. The reason Dave and other experts say to hit the small loan first is because it can be accomplished faster and gives you a sense of accomplishment to help motivate you to keep going after more debt. It's more about psychology and growing momentum, but it's more effective when you have a wide variety of debts as it can be demotivating to throwing a lot of money at a really big debt while a bunch of small ones keep giving you tiny cuts.

If you're confident you can live frugally and consistently throw every penny you have at the higher interest debt until it is gone then do that.

If you've tried to tackle this before and gave up or keep getting sidetracked then maybe knockout the student loans first.