Debt Avalanche

The debt avalanche will save you money in the long run and provides a clear path on how you can get out of debt.

Debt avalanche. The debt avalanche also known as debt stacking is when you pay off your debts in order from the highest interest rate to the lowest regardless of balance. The debt avalanche method targets the debts with the highest interest rates first. The debt avalanche system works best when you have to tackle multiple high-interest credit cards.

Any debts over 10 percent are too steep a price for the psychological boost youd get from eliminating a smaller debt with the snowball method. HOW IT REALLY WORKS. In our example above we paid off 28000 in debt and 3410 in interest.

It will help you know the current outstanding payment the APR the current minimum payment on your bills the due dates etc. How The Debt Avalanche Works. If you are driven and focused this may be the plan for you.

What Is a Debt Avalanche. A debt avalanche works like this. Quick Summary of the Debt Avalanche Method The Debt Avalanche Method is a strategy to help you prioritize and pay off your debt quickly.

If wed used the debt snowball method we wouldve paid approximately 3563 to interest. It doesnt matter how much you owe on each one. Essentially a debtor allocates enough money to make the minimum payment on each source of debt then.

Using this method you pay minimum payments on all your debts except for the one with the highest interest rate. There are many people out there promoting strategies for how to get out of debt. The debt avalanche saved us 153 in interest payments over two years and nine months.