When prioritizing debts, which type is typically suggested to be repaid first?

The recommended strategy for prioritizing debts often emphasizes the importance of securing one's assets, which is why secured debt is typically suggested to be repaid first. Secured debts are backed by collateral, meaning that if the borrower defaults, the lender has the right to seize the asset (such as a home in the case of a mortgage) to recover the owed amount. This creates a significant risk for the borrower since losing the asset can lead to additional consequences, including homelessness or loss of essential transportation.

By focusing on secured debt first, individuals can protect their vital assets and maintain stability in their lives. This approach helps minimize the potential impact of financial distress since losing a secured asset carries far greater implications than the consequences of defaulting on unsecured debts, such as credit card debt or medical bills.

While other types of debt, such as unsecured debts or student loans, may carry different implications and management strategies, the urgency of maintaining ownership of secured assets typically places them at the top of the repayment priority list.