Of course there are differences between secured and unsecured loans, and Dave mentions that. However, the point he is making is that they are both debt. And, they are. One of Dave’s mantras is the Proverb that the borrower is slave to the lender. So, in that way of thinking, interest rates, collateral, terms, etc., do not make much difference in the big picture. Many people point out that, contrary to Dave’s debt snowball plan, paying off the highest interest rate first makes the most financial sense. And, on paper, they are right. However, much of his advice is geared to folks that are not the most responsible financially. If they were, they would not be in this place to begin with. So, he encourages one to pay the smallest debt off first. That gives people a sense of accomplishment and can quickly make the number of payments they face each month a little less daunting. Then, they take the money they were paying on the debt they just paid off and apply it to the next smallest debt. Once again, not necessarily the cheapest in the long run if they are paying off the low interest debts first, but if it helps pay them all off versus giving up, it is much better overall.
The $15,000 of available credit is not needed with a fully funded emergency fund. Which is the idea with Dave. But, you are right; mortgage insurance is a waste. Besides depriving the beneficiary of the options when receiving cash, the premiums are much more than term life. Dave points this out in his advice, too.
I’m focusing on this statement from the article: “We’re almost out of debt, but we still have two small car payments and some credit card debt.”
The payments may be smaller than the minimum payment on the credit card, for all we know, but the loans may be larger than the credit card. If, in fact, they owe $10,000 on the card but only $1.500 on the two cars, I’m all over paying off the cars, regardless. I actually did that even though I had a five digit balance on a card. But I don’t know what the balance is on the car loans, hence my response.