Suze Orman’s Debt Loyalty List: An Order of Paying off Debt

Joseph Meyer
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6 Kinds of Debt According to Suze Orman

There are many forms of debt, and they vary greatly in terms of what you can do and what your options are when dealing with them. For example, credit card debt is often much easier to get out of and deal with than student loans.

Suze Orman, financial expert and host of the popular television show, The Suze Orman Show, has devised a numerical system for dealing with your debts that she calls the “Loyalty List.” The system is broken down into six tiers, A through F. Tier A represents the most manageable debts, while Tier F the most unmanageable of them all.

IRS Debt

Student Loan Debt

If you’re in college or planning to go to college soon, then your first major purchase in life is making student loan payments. That is if your parents didn’t already pay for your college education.

Most students and parents take out a student loan to finance a portion of the college education costs. Often times, credit cards are used to finance part of it as well.

After all of your tuition fees are paid, you can pretty much do whatever you want with the money that’s left in your pocket. For some, that’s a great thing. Not for me though. Because I want you to use that money to put a dent in that student loan.

Having a college degree opens up a lot of doors for you. And while you’re paying off your student loans, you should be able to have a better quality of life than your student debt-free buddy. If you’re going to have to live paycheck to paycheck once you’re out of college, then you’re not doing it right. In fact, it’s totally unnecessary.

Personal Debt

I write about personal debt management a lot – from tips on saving, to getting out of debt, to using credit and debit cards wisely, and I try my best to take a comprehensive approach on everything financial. Financial issues are complex, and there is no simple, one-size-fits-all answer to them.

That said, debt management is one of my biggest pet peeves, so I’m going to share my method to help you handle your personal debt by dividing it into three main categories: debt that has tools for you to use to get rid of it, debt where you need to write a new budget that will resolve the problem, and debt that you need to address with a third-party solution (hiring a debt consolidation company that will negotiate for you).

Mortgage Debt

Car Loan Debt

You can definitely pay off your car loan faster than your credit card debt.

In fact, it’s relatively easy if you pay no interest on your credit card debt. When you pay off credit card debt, you’ll be saving thousands of dollars in interest charges.

Your car loan comes with interest payments. So, at least for the first few years, it’d make sense to treat car loan debt as a last priority and clear it off last.

If you have the maturity to do so, think about paying off your home mortgage before your car loan. It’ll save you thousands of dollars in interest charges as well as years of interest payments.

Credit Card Debt

Chapter 7 All.

Suze Orman’s debt loyalty list follows the order credit card debt should be paid off.

The first priority should go to your credit cards with the highest interest rate.

You can throw away all your other credit cards. Do not apply for any new credit cards. Do not lend friends or family any more money.

If you can pay off your card debt in full at the end of the month, you do not have to pay on these cards until you get paid again. So if you get paid on the 4th of the month and you have the money, you can put a check in the mail on the 4th. For the time being you can throw away the card and live without it.

Cash advance is your last debt. The first line of credit you should pay off should be the credit card that charges you the highest interest rate.

Continue paying the minimum due on all the cards except for the card with the highest interest rate. When the card with the highest rate is paid off, then of course you send the money that you were using to pay of that debt to the next card with high interest. After you pay off all your credit cards with the highest interest rates, any remaining money should be used to pay off your smallest balance credit card. Then you throw away the card and live without it.