You’ve Got to Know When to Hold ‘Em


debt free

Debt free living does not have to be complicated when you have taken all the right steps towards reaching that goal.  You start with a budget, which I prefer to call a spending plan, and then work your way towards saving 3-6 months of living expenses.  Once you have your emergency fund set up, you should make a list of all your credit cards with their balances and interest rates.  This will help you begin your debt repayment plan.

Your debt repayment plan will depend on several factors, and you will have to make some tough decisions based on your personality.  There is some debate about the most effective way to pay back your debt.  Some people feel that the extra payments should be made starting with your highest interest rate debt.  In other words, if you have three credit cards with 9.9%, 12%, and 24%, it makes the most sense to begin with the 24% rate card. The ideology behind this method is that you are forking out more in interest each month for that card, and you will recoup the most money by paying that one off first.

However, the debate comes with the card balances. What if your 9.9% card only has a $300 balance, while your 24% card has a $5,000 balance.  Some financial advisors feel that you should start with the lowest balances and pay each card off as quickly as possible, no matter how much the balance is for each card.  This is more like a snowball method, where you start paying off smart balances and continue onto your bigger balance card.  The idea behind this method is that you will start feeling better about paying off your debt as you can mentally (or physically) check each debt item off your list.

It seems to me that this would depend a lot on your personality.  While I’m not an avid poker player, I have watched others play the game, and repaying debt can sort of seem like playing poker at times.  You have to know when to hold off on paying on a certain card, or you may go “all in” and pay off a total balance with some savings, just to see balance at $0.  What type of poker player are you? Would you rather “hold ’em” and pay off those larger balances first, or go “all in” and pay the smaller balances first to check each debt off your list. 

Whatever your Debt Repayment Personality is, it WILL affect how you repay your debt.  If you are a list checker, then go with the snowball method.  If you can hold ’em and want to recoup more money, then go with the Highest Interest First method.  You will have some decisions to make, but if you make the right decision based on your personality, then you will have less chances of falling off the wagon!


Stephanie Brandt is a wife, mother, and the Founder of Debt Free She has a Master’s Degree in Education, and has a desire to teach others about how to handle their money.


  1. Joanna says:

    Personally, I think I would rather go all in and pay one off at a time. I do like the snowball method, though, so after I have committed a portion per month for a bill, paying the bill off doesn’t mean that portion goes into savings (or elsewhere), I would apply it to another bill instead.

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