Speaker 1: Ryan is in Roanoke. Hi Ryan, welcome to the show. Hi Dave, how are you now? Better

Speaker 2: than I deserve. What's up? Hey, so I graduated this spring from Virginia Tech and I'm starting to take a look at paying off my student loans and I was introduced to some of your videos through YouTube and I'm trying to figure out the best way to go about that. Cool. How much student loan debt do you have, Ryan? Just over $50,000, I think like $51,000. Okay. Do you have any other debt besides that? A car loan or a couple thousand that's still left. Okay. But paying off

Speaker 3: quickly, yeah. Yeah, and is the $50,000 student loans, is it broken up into multiple loans or is it one large student loan? It's multiple loans and I

Speaker 2: guess that's kind of where the main question lies. I've been saving up to try to take care of the highest interest rate, one of those loans, to save myself some money and after watching your videos about the debt snowball, I'm not sure if I should do that or take care of a couple of the smaller ones with lower interest rates first. Yeah, sorry, one last question. How much do you

Speaker 3: have saved? You said you've been saving to throw at the highest interest rate or you're just saying as you're getting money, that's what you're paying

Speaker 2: off first? Saving to do that, I still have a couple months, I guess now only about a month until they actually turn on six months after. Oh yeah, that's fair. I think my payments start in January. How much do you have in your savings account? Right now $11,000 after an end-of-year bonus, I think probably more like $13,000.

Speaker 1: Okay, and what is your smallest student loan? $6,700 I think. Perfect. Okay, so you probably heard this on YouTube, we're gonna list your debts smallest to largest, right? Mm-hmm. So today, I would pay off your car and your smallest

Speaker 2: student loan. And you think that that would be the best, you know, the best way? I mean, I'm definitely a saver. I know Rachel talks about, are you a saver or a spender? I'm definitely a saver, so I don't think there's a problem to keep going with it, but you think that I should take care of the smallest loan and

Speaker 3: the car first? Yeah, because when you look at the debt snowball versus the debt avalanche, it's another way of looking at the highest interest rate, what you're doing. With the debt snowball, not only have studies come out to show that it is the fastest way to get out of debt, but what ends up happening is, is you start knocking out those smallest debts and you eliminate it completely. And what you're not factoring in is just the emotional toll and what happens to human behavior when you start to get quick wins. And so by knocking off those smallest debt first, you're actually doing so much to keep you motivated. And Ryan, as a saver, you know, putting, we're gonna tell you, if you have $13,000 saved off your bonus, putting it all towards debt except for $1,000 is gonna make you feel very uncomfortable. So just heads up on that too. But that gives you an urgency as well. So by paying off smallest to largest, I'm telling you, the behavior change that occurs in you, the motivation continues to get those quick

Speaker 1: wins. Absolutely. Now let's do a little math, okay? $52,000, $53,000 minus $13,000 is $40,000. And you make, what do you say, $51,000? Yeah. I can't remember. I don't know if he told us what his income was. But so, how quick you gonna play off $40,000? Maximum of 18 months. You're gonna do it real fast now, dude. Get after it.