One thing I’ve noticed is that wealthy people usually do not rush to pay off their biggest debt first. There’s a reason.
Let’s say you have:
A $30,000 car loan at 7%
A $400,000 mortgage at 6%
Most people assume the mortgage should get the extra money. But that often does very little for your monthly cash flow.
Now look at the car loan.
If that payment is around $600 a month and you knock it out fast, you’ve now freed up $600 every single month. That gives you more flexibility, more margin, and more options.
If you throw that same extra money at the mortgage for two years, your payment usually stays the same. Yes, you may build equity faster, but your monthly cost of living does not really improve.
And here’s the other key piece:
The car is a depreciating asset.
The house is often an appreciating asset.
That is why many wealthy people focus on eliminating the debt tied to the asset losing value and draining monthly cash flow first.
Not all debt is equal.
Smart debt strategy is about more than interest rate.
It is about control, liquidity, and cash flow too.
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