For maximum juice, tackle your highest-interest debts first.
That saves you the largest amount of money each month, and helps you pay down the balances faster.
For example, say that you’re paying 24 percent on a credit card. For every $100 in debt reduction, you save $24 in interest — money you can plough back into more debt reduction the following month.
If you use that $100 to lower a 12 percent debt, you save only $12. At that rate, it will take you longer to become debt free.
Some people like to pay off small debts first, even if the interest rate is low. It makes you feel good to get them out of the way.
If that’s what it takes to start you on a serious debt reduction, I say “Great! Go for it. Do whatever works.” But from a financial point of view, repaying high-rate debt gives you the most bang for the buck.