Quote from: JayJuanGee on July 05, 2025, 06:47:54 PM

Quote from: Tungbulu on July 05, 2025, 11:22:52 AM

Quote from: JayJuanGee on July 04, 2025, 09:13:48 PM

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I think that all that you said is correct, including your analysis.. including your assessment that having liquid funds has a considerable amount of value, even if they are not necessarily earning any yield... and so frequently the balances in regards to how much to hold in each might not be the same between different guys, and some guys might be willing to pay more interest on certain kinds of debt, even though logically it does tend to make the most sense to pay off the higher interest debt first, sometimes there could be other rationale, including that if one is 20% and the other is 18%, then there is a not a big difference as compared with the difference between 6% and 20% is more than 3x... and surely the longer that the higher interest rate persists the difference becomes more noticeable when the interest is compounding upon itself and some loans might measure compounding on a daily basis and others might be monthly or quarterly compounding, which also could make differences regarding managing them but also considering if the way it compounds might change the costs of such loans...and yeah of course, if the interest rate is over the term of the loan, and other interest rates might be described in annual terms, so there may be some needs to recalculate when making comparisons. I recall on many occasions over the years (more an 25 years) receiving various zero% credit card loans, and some of them had origination fees and others did not some of them had terms that were 12 months, others 18 months and others 21 months... so if both of the cards have zero percentage, yet one has an origination fee of 3% over 1 year, then that is higher than the one that has origination fee of 4% over 21 months.

You've done pretty well in highlighting the complexities involved in managing debts and liquid funds. You're right that individual circumstances can potentially lead to different priorities, even when it may appears to be that paying off high interest debts first makes more sense. The difference between interest rates like 18% and 20%, may not be considered to be as significant as between 6% and 20%.
Compounding frequency and loan terms also have the ability to influence debt management. Whether daily, monthly or even quarterly compounding, it can potentially affect the total of loans and it is crucial for folks to have full understanding of this as it could potentially help them in making more informed decisions.
I also find your experience with 0% credit card loan terms to be quite a helpful example. It is quite noting too, that origination fees and loan terms can potentially influence the loan's effective interest rate. In the scenario, you did well to describe that the 3% origination fee over 1 year might be more favourable than a 4% fee over 21 months and I find this to be very agreeable as your points emphasizes more on the importance of carefully evaluating laon terms, interest rates as well as fees as these are essentials when managing debt. Folks tend to make more informed decisions that aligns with their financial goals/circumstances when they put these factors into adequate consideration.