Debt is like that guest who overstays their welcome, eats all your snacks, and somehow makes everything about them. The good news? You don’t have to let debt crash on your financial couch forever.
To pay off debt fast, two strategies stand out: Debt Avalanche and Debt Snowball. Let’s break them down.
1. Debt Avalanche: Crush High Interest First
This method tackles the highest interest debt first while making minimum payments on the rest. Once that’s gone, move to the next highest rate.
Example:
- Credit Card A: $5,000 at 22%
- Personal Loan: $3,000 at 10%
- Car Loan: $8,000 at 5%
With an extra $500 per month, you’d attack Credit Card A first, then roll that payment into the next debt. This method saves the most on interest.
2. Debt Snowball: Small Wins, Big Motivation
Here, you pay off the smallest balance first, regardless of interest, while making minimum payments on the rest. Quick wins build momentum!
Example:
- Medical Bill: $800 at 0%
- Credit Card B: $2,000 at 18%
- Student Loan: $10,000 at 6%
You’d wipe out the $800 Medical Bill first, then roll that payment into Credit Card B, and so on. Great for motivation but may cost more in interest.
Which One’s for You?
- Want to save the most money? Go with Debt Avalanche.
- Need quick wins to stay motivated? Try Debt Snowball.
Either way, stay consistent, and you’ll be debt-free faster. Time to show that debt who’s boss!