Comment: On paying off loans...

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TwelveOhOne's picture

On paying off loans...

You said "Pay off smallest loans or credit cards first and then hit the next smallest."

The better algorithm would be to pay the minimum balance toward every creditor, and with any money left over that pay cycle, send it all to the creditor with the highest interest rate. Once that one is paid off, send all extra income to the next highest, etc.

This will ensure your loans are paid off in the shortest time possible, with the least interest paid.

It's slightly more complicated, but I know the 20-years-younger me would get it. :)

I definitely agree with staying out of debt. One should also not hold one's wealth in currencies that are devaluing/inflating -- so buy guns, gold, and land, generally in that order.

Guns to protect the rest; land because "they aren't making any more of it", and gold for similar reasons to land, but it's more portable/liquid.

Silver is also good, it's usable for smaller items than gold, like a dinner, and there's currently a ~52-to-one ratio in the price of silver vs. gold. There is only 16 or so times as much silver as gold on the planet, so this is an artificial difference which should correct itself. Thus, you (20-years-younger 12:01) should be buying silver today, and if you have gold, swap it for silver, because the ratio should correct; if it goes under 16-to-one, swap silver for gold.

Oh, and look into Bitcoin. See http://mtgox.com, it has been above $21 in the past couple days. It was $15 a few weeks ago when someone posted a beginner's guide to it. It's a hair over $20 now, so that's a 33% jump in a couple weeks. Definitely worth looking into.

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