Paying off debt ranks among the most important things a person who wants financial stability should do since being in financial debt affects just about everything from trying to rent an apartment to getting a loan for school. But it’s also important to know which debt to pay off first, how to choose which debt to pay off first and why it is important to pay it off.

After a little searching, I found two methods that can help you decide which debt to pay off first. The first method is the Quicken method, which can be found on their website. The plan revolves around interest payments and tries to minimize the total amount of interest you have pay. With all debt, there is always the dreaded interest payments that you owe to the creditor, or the person you are obligated to pay the money to. These interest payments are money you owe on top of what you originally borrowed from the creditor (the principle). Different creditors charge different interest rates, and the longer you wait to pay off your debt, the more interest you’ll get charged. Naturally, you’ll want to pay off the debt with the highest interest rate first to get it out of the way and apply the minimum payments to the rest of your debt. Once your debt with the highest interest rate is paid off, move on to the next highest interest rate debt.

The second method I found was surprisingly on Oprah’s website, called the DOLP method or “Dead On Last Payment”. Basically this plan centers around paying off the smallest debt first and moving on to the next smallest debt. First you must find the DOLP of each debt you have. You find this by taking the total amount of debt you owe from a creditor and dividing it by the minimum payment for the month. Then you order each type of debt by their DOLP number, putting the least DOLP debt first. This will be the order you pay off your debt. This plan tries to get rid of all of your debt as fast as possible and as a result, minimizes your total interest payments.

Both of these methods can work, but it really depends on how much debt you really have and how much you can afford to pay each month towards your debt. Try each method and see which method works the best for you and go with that.That brings us to another issue, which is how to budget enough to pay off your debt, but we’ll go into that later.

Quicken Method is from Quicken.com.
DOLP Method is from Oprah.com.