MEPX
Chapter 3 of 10All chapters
  1. 1Knowing your cashflow
  2. 2The emergency fund
  3. 3Debt
  4. 4Saving and compounding
  5. 5Housing and large costs
  6. 6Insurance
  7. 7Tax and payslips
  8. 8Long-term saving
  9. 9Fraud and pressure
  10. 10Making it stick

Chapter 3 of 10

Debt

Cost, order and traps.

Ordering repayment

Clearing the highest interest rate first costs the least overall. Clearing the smallest balance first gives faster visible wins, and the difference in cost is worth knowing before choosing.

  • Credit card rates are typically many times mortgage rates.
  • Only the minimum payment means interest keeps compounding on the rest.

Good and bad borrowing

Borrowing for something that grows in value or earning power differs from borrowing for consumption. The rate and the term matter more than the label.