Understanding Debt Repayment
If you're carrying multiple debts, choosing the right repayment strategy can save you thousands in interest and help you become debt-free faster.
The Snowball Method
With the snowball method, you pay off your smallest debts first while making minimum payments on larger debts.
Pros: Quick wins provide motivation, psychological boost
Cons: May pay more interest overall
The Avalanche Method
With the avalanche method, you pay off debts with the highest interest rates first.
Pros: Saves the most money on interest, mathematically optimal
Cons: Takes longer to see results
Which Should You Choose?
The best method is the one you'll stick with. If you need motivation, try the snowball method. If you want to minimize interest, choose the avalanche method.
Pro Tip
Regardless of which method you choose, try to pay more than the minimum whenever possible to accelerate your debt payoff.