View source for Launch: Paying Off Large Debts


=== '''15-Minute Debt Payoff Challenge''' ===

https://duckduckgo.com/?q=paying+off+loans+video&t=newext&atb=v369-1&iax=videos&ia=videos&iai=https%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3DC1H8NG9fLAc

==== '''Materials Needed:''' ====

# '''Debt Profile Sheet''':
#* '''Loan A''': $4,000 at '''6%''' interest
#* '''Loan B''': $3,000 at '''8%''' interest
#* '''Loan C''': $3,000 at '''5%''' interest
# '''Monthly Income''':
#* '''$1,500''' monthly income, with '''$1,200''' in fixed expenses, leaving '''$300''' for loan repayment.
# '''Repayment Options''':
#* Loan A: '''$50''' minimum
#* Loan B: '''$75''' minimum
#* Loan C: '''$45''' minimum
#* Extra payments can be allocated to any loan.
# '''Loan Repayment Worksheet''':  To track interest and payments.
# '''Calculators''' (optional, for speed):  To calculate how extra payments impact interest and the repayment timeline.

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=== '''Steps:''' ===

==== '''1. Introduction (3 minutes)''': ====

* Briefly introduce the scenario: "You owe '''$10,000''' in student loans across three loans with different interest rates. You need to create a plan to minimize interest and pay off the debt as efficiently as possible with '''$300''' for extra payments after covering fixed expenses."

==== '''2. Strategy Phase (7 minutes)''': ====

* In groups, students will:
** Decide how to allocate the '''$300''' extra payment.
** Discuss which loan to prioritize based on the interest rates and total cost.
** Consider the '''Debt Snowball''' vs. '''Debt Avalanche''' method in their discussion.
* Encourage groups to decide:
** Should they pay the minimum on all loans or make extra payments on one loan?

==== '''3. Group Presentations (4 minutes)''': ====

* Each group briefly presents their repayment strategy:
** Which loan they prioritized for extra payments.
** How they distributed the $300 extra payment.
** Their reasoning (Debt Snowball or Avalanche).

==== '''4. Quick Reflection and Discussion (1 minute)''': ====

* Ask the Socratic questions to quickly reflect on strategies:

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=== '''Socratic Questions for Reflection (A/B Choices):''' ===

# '''Why might someone choose to pay off a smaller loan first, even if it costs more in interest?'''
#* A) Because it feels rewarding to eliminate a loan quickly and build momentum.
#* B) Because it may not be the most financially efficient choice, and they prefer tackling higher-interest loans first.
# '''How does focusing on the loan with the highest interest rate impact long-term financial health?'''
#* A) It saves more money over time because less interest accumulates.
#* B) It may take longer to pay off smaller loans, but it avoids the emotional satisfaction of clearing small balances.
# '''What factors (income changes, emergency expenses) might affect a repayment plan?'''
#* A) A sudden change in income or an emergency expense might force you to slow down repayments or reallocate funds.
#* B) A windfall, like a bonus or gift, could allow for faster repayment, but it's hard to predict.

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=== '''Why It Works in 15 Minutes:''' ===

* '''Focused Learning''': Students quickly analyze and prioritize loan repayment strategies, learning to balance emotions and financial efficiency.
* '''Real-World Application''': The activity simulates real-life financial decision-making, encouraging practical insights into managing debt.
* '''Engagement''': The brief but intensive exercise keeps students engaged and encourages rapid critical thinking.