Should We Pay Off Credit Cards, Student Loans, or Mortgage First? – Cathy

“Dear Steve,

We have some debt – 15k credit card (low interest); 10k student loans and 200k house. We pay all on time. We have a little money for margin (about 3k). We are able to keep paying on debt no problem at present.

I foresee a complete breakdown of financial system coming in next 5 years, maybe sooner if the USD looses its position.

Should we sweat brow to make early payoff of credit card/school loan debts or use extra money paydown home loan?


Dear Cathy,

My outlook is less sanguine and don’t think we will see a complete collapse. However, less debt is always a good thing simply because it gives you better life options.

Of those three debts the scariest is the student loans. I’d focus on paying that off ASAP and then use 50% of your available debt repayment dollars to pay down the credit card and put the other half in savings to build it up.

This way, in the event of a possible collapse you won’t owe the student loans which can lead to a capture of tax refunds, levy of your bank account and no bankruptcy discharge. You’ll have more cash in the bank to deal with life at that time and will have substantially paid down the credit card liability which is running you $350 or so a month.

You’ll just be left with the house debt and if it all comes tumbling down we can deal with alternative living arrangements at that time.

Just my two cents. Sound reasonable?

Please post your responses and follow-up messages to me on this in the comments section below.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
Damon Day - Pro Debt Coach

Steve Rhode

Leave a Comment