Sometimes, looking at one piece of the puzzle, it may seem obvious what the best move to take is. But once the entire picture is brought into view, it isn’t as clear cut any longer. All the aspects of a decision need to be considered, not just the financial ones. And that is where motivation can come into play.
Back when I was still deep in credit card debt, I talked about how I assumed transferring my credit card debt to a 0% interest limited duration offer (that we could pay off within the introductory 0% period) was a better deal financially than to a 2.99% interest fixed for life of transfer offer. Which it is on the surface, but once I took my entire financial picture into consideration, that simply wasn’t the case as far as dollars and cents were concerned. Financially, it would have saved us money in interest to transfer the credit card debt to the 2.99% offer, and then aggressively pay off our two student loans and then the car loan before tackling the credit card debt past the minimums. But for us, we couldn’t ignore that there were more than dollars and cents at play here. Paying off the credit card, above all else, was an important motivating goal for us, and delaying that while paying off other debts didn’t make sense for our emotional well being and commitment to our long term goals, past our financial one.
When we moved our credit card to that 0% offer, we had that 0% rate for the next 12 months – it would expire in September of 2008. Yet, instead of banking the extra money above the minimum and earning a little interest, we also moved aggressively to pay it off and finished with that debt in February of 2008. Why? Again, for us, it was the best way to keep us moving forward, on track, and motivated. We needed to push ourselves and strive to attack the debt as fast as possible. Would we have saved as aggressively as we paid? I don’t know. I’d like to hope so, but at the same time, I’m not completely sure. For our entire financial picture, the choice we made felt like the right thing to do.
And now, we are playing the interest rate game, and paying off my spouse’s student loan (at the highest interest) before paying off our much smaller car loan (the lowest interest debt). This makes the most financial sense as far as spending the least amount of money to wipe out the debts, yet in the poll I put up Tuesday about which debt to put my Revolution Money Exchange referral bonus towards, the car debt has garnered a significant amount of votes. Not enough to knock my spouse’s student loan out of first place, but it is close. And I understand completely where those voters are coming from. It would feel great to knock our non-mortgage debts down from 3 to 2. It feels great to even say we have 3 non-mortgage debts now versus 4. And the reduction in monthly obligations would provide some breathing room we may need. I can see that being a more viable choice for many situations. And I even understand where the voters who picked my student loan are coming from too. That’s *my* debt, and we’re focusing so many resources on my spouse’s, that it would be nice to give me a little reward too. My spouse and I are both still happy with the path we’re on as far as debt elimination order, but I can’t rule out changing course in the future if something else changes.
The people who voted to buy a monkey though – you’re on your own. I don’t know what motivates that.