Everyday Money Habits · Classroom packet
Debt, the honest way.
Most debt advice starts with a rule: pause everything, pay off every balance, then invest. This packet walks a group through the version that holds up to the math instead. Two ideas do the work: the interest rate, not the size of the balance, decides which debt is a fire, and the employer match (the free money your workplace 401(k) retirement plan adds to what you put in) comes before all of it. Read the one sentence, rank the moves together, find each person's spot, and everyone leaves with one move.
Lead a group through the order debt gets paid — capture the match first, attack the highest-rate balances, pick one method and finish it, and name one move each.
You're running a class, small group, or kitchen-table session for adults carrying a mix of debts and want a no-prep handout on where to send the next dollar.
For the leader
Anyone can run this — a teacher, a small-group or mentorship leader, a parent at the kitchen table — for two people or a full room. No math background needed. Four beats:
- Open with the question — don't name the idea yet; let the room argue it first, then reveal the sentence.
- Rank the six moves together — number them 1–6 in the order you'd send extra money. The order is the lesson.
- Everyone ticks the personal check; the first unchecked box is their next dollar.
- Before you close, everyone names one move — a debt to target, a rate to look up, a percent to raise — and a date.
- 0–4 Open with the question; then name the idea.
- 4–14 Rank the six moves — guess first, then reveal.
- 14–21 Find your spot — tick the personal check.
- 21–27 Talk it through.
- 27–30 One move each.
"The usual advice says pay off all your debt before you invest a dollar. Today we'll test that — starting with whether anything belongs ahead of the debt at all — before I put a name to any of it."
Most groups rank the match low — it feels like the thing you get to "once the debt's gone." That instinct is the whole lesson: skipping the match to pay debt faster is the most expensive shortcut there is. Have the answer key's match math in hand before you reveal.
This is a planning session, not a rescue. If someone's behind on payments, facing repossession, or weighing bankruptcy, point them to a non-profit credit counselor accredited by the National Foundation for Credit Counseling (nfcc.org) — that's outside what a 30-minute group can solve, and it's the right kind of help.
1 · The whole idea, in one sentence
You have extra money and five debts. Do you attack the biggest, the smallest, or the one charging you the highest rate? And before you choose — is paying a debt even the first thing this money should do?
The interest rate, not the size of the balance, decides which debt is a fire — and the employer match comes before any of them.
There's a map already drawn. Money Guy's Financial Order of Operations and Dave Ramsey's Baby Steps take different paths — Ramsey clears nearly all debt before investing; Money Guy captures the match first, then turns to the high-rate debt. Neither is wrong; they're built for different starting points. But both agree on the shape: some debts are emergencies and some aren't, and the rate is what tells them apart. The next section makes that visible.
2 · Which gets the extra dollar first?
Here are six things you could do with a spare $100 this month — one retirement move and five debts, in no particular order. As a group, number them 1 to 6: 1 for what you'd fund first, 6 for last. Don't overthink it; put down your best guess, then we'll reveal the order and see how close the room got.
One hint, since it's the surprise every time: paying off a credit card isn't "spending." Wiping out a 27% interest rate is identical, in dollars, to earning 27% — guaranteed, tax-free.
3 · Find your spot
Now make it personal. Tick what's already true for you. The first unchecked box, reading top to bottom, is where your next dollar belongs — that's the whole tool. Most people land on box two, three, or four; that's the working part of the order.
- I have cash set aside for my biggest insurance deductible (what I pay out of pocket before insurance covers the rest), so the next surprise doesn't land back on a credit card.
- I'm getting my full employer 401(k) match, and I've kept it on even while paying down debt.
- I've written down every debt I owe next to its interest rate (the APR, or yearly cost of borrowing, listed on each statement or online account), highest rate to lowest.
- I've picked one payoff method and I'm sending every extra dollar to a single target debt, not a little to each.
- I've paid off, or set a written payoff date for, every debt charging me about 7% or more.
- My debt payments run on autopay, so staying on plan doesn't depend on remembering each month.
- My low-rate debts (a car loan, federal student loans, a low-rate mortgage) are on schedule, not being rushed ahead of investing.
The two payoff methods, in one line: snowball pays the smallest balance first, for the momentum of a quick win (and once a debt's gone, its old minimum payment rolls onto the next one); avalanche pays the highest rate first, for the lowest total interest. Pick one and finish it — most people who fail at debt payoff fail because they keep switching, not because they picked wrong.
4 · Talk it through
- Someone says, "I'll pause my 401(k) match for a year to kill the credit card faster." What does that actually cost them — and is there a case where it's the right call anyway?
- Two people have the exact same debts. One should use the smallest-balance method, the other the highest-rate method. What's true about each person that decides it?
- A friend is proud of a low monthly payment on a long car loan. What's the one number they haven't run — and how would you raise it without lecturing?
- Where are you in the order right now, and what is the very next debt or box you'd attack this week?
A case to argue
A friend just bought a $23,000 car — 18% interest, 72 months, $525 a month. They're proud of the low payment, and they haven't multiplied it out: about $37,770 in total, for a car worth maybe $8,000 by the time it's paid off. They've already signed the loan.
What would you tell this person?
5 · One move, this week
The outcome is a single line: my next dollar goes to X. Do that one thing this week — don't try to fix three at once; the order is a sequence, not a set of parallel projects. For most people the move is quick: raise your 401(k) contribution to at least the percent your employer matches (find it in your benefits portal, or ask HR), write down every debt with its rate, or set one extra automatic payment on the highest-rate balance. Go around the group; each person names their move and a date.
Answer key · for the leader
Keep this page back, or hand it out after the ranking. The point isn't a perfect score — it's the surprise that the match belongs ahead of every debt, and that the two payoff methods barely differ.
- Capture the full employer match first, before any debt. For every dollar you put in, your employer adds fifty cents to a dollar more: a 50–100% return the day you sign up, guaranteed, and you can lose it forever. Each pay period you skip it, that match money is gone — not deferred, gone. It is the one step that shouldn't move based on your debt.
- Attack the fires: anything above about 7%. The store card (27%), the credit card (22%), and the personal loan (11%) are the fires. Wiping out a 27% balance is identical, in dollars, to earning 27% guaranteed — better than any investment. Rate, not balance size, is what makes a debt urgent.
- Leave the low-rate debts on schedule: the 0% and the 6.5%. Below about 7%, paying extra is usually slower than investing the same dollar. Pay the furniture promotion and the car loan on time; don't rush them. They sink to the bottom no matter which method you use.
Once the match is captured, the only open question is the order of the three fires, and it has two defensible answers. Smallest balance first (snowball): store card → personal loan → credit card. Highest rate first (avalanche): store card → credit card → personal loan. Snowball clears the small 11% loan for a quick win; avalanche kills the big 22% card's interest sooner. The gap between the two is a rounding error next to the gap between either one and no plan at all — so pick the one you'll actually finish. The 0% furniture promotion and the 6.5% car loan stay on schedule either way.
Pause a dollar-for-dollar match for three years to pay debt faster and you don't just lose the contributions — you lose the match on top of them and decades of growth. In the debt guide's worked example, $10,800 of foregone match becomes roughly $94,000 of age-65 buying power. The extra interest from staying in the fires a few months longer is a few hundred dollars. The trade is that lopsided. (The one honest exception: if capturing the match would push you back into new card debt, pause until that cycle is broken, then restart at the match level.)
Any answer that names the rule as "rate decides urgency, and the match comes first" works — e.g. "I capture the match, then attack whatever's charging me the most, and leave the cheap debt on schedule."
A strong answer resists relitigating the purchase — they already signed, and "you should have" just ends the conversation. It leads with the relationship and names a door still open: refinancing through a credit union can drop the rate, and the total, without touching the car; paying extra against the balance early (where the interest is front-loaded) shrinks it faster; and if the payments are stretching, selling privately beats waiting for a repossession. The move is one non-judgmental line offered only if they want it — "How are you feeling about that payment? Some people refinance after a few months and the rate drops a lot." Drawn from the "friend bought a car at 18%" Moment (M2) on the site, if a leader wants the full version.
Based on the Guide to paying off debt.
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