Paying Down (My Sanity)

Last week I wrote about how instead of driving myself crazy by only saving for my “shoulds,” I’m contributing to a fun savings fund for my wants as well.  I thought of that fun wanderlust fund when I saw this Sunday’s PostSecret, which including this exciting card:

(The front says,”I’ve booked and paid for a vacation 8 months from now that I won’t be able to take unless I quit my job.”)

I love it.

Moving on, today, I wanted to mention something else I do with my money simply for the psychological benefits. 

Once a month, I withdraw everything from my bank, in small bills so it looks like more and I do the whole throw it in the air, roll around in it thing.

Just kidding.  That would be weird, right?  Thought so.  Yeah, I definitely don’t do that.

What I meant to say is that I know it makes sense to pay off higher interest debt first.


My only debt currently is student loans.  Ugh.  I have two loans I’m repaying, both with relatively low interest rates, but the one with the higher interest rate is a larger balance, so for the sake of my sanity, I’m focusing my extra payments on the smaller loan with the smaller interest rate.

Even as I type it out, I realize it doesn’t make sense. 

There is much debate in the personal finance world over paying off smaller balances first v. paying off higher interest first (and which is truly the “snowball method”).  You’re more likely to stick with a plan when you see the progress, but in the long run, you’ll pay more if you go with the small balance theory.

For me, the psychological benefits outweigh the minimal difference in interest I’m paying on the larger debt.  I really want to cross that sucker off and, because I’m overpaying, I will be able to by the end of this year. 

Should I find myself with credit card debt again, I would definitely focus on getting that paid off because credit card companies are the devil and I refuse to give them any more of my money than necessary, but for now, my plan to pay down my sanity works for me.

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