Step 3 of 12 to Financial Wellness: Pay Down Debt
Now that you have a solid grasp of budgeting, the next step may be tackling your debt. In this article, we will explore two effective repayment strategies: the Avalanche Method and the Snowball Method, helping you determine which approach aligns best with your financial goals. The Avalanche Method Also known as the Debt Stacking Method, the Avalanche Method prioritizes paying down high-interest debt first while maintaining minimum payments on lower-interest debts. How to implement the Avalanche Method: Organize your debt by listing them in order of interest rate, from highest to lowest. Make all the minimum monthly payments and put extra money towards the debt with the highest interest rate. After the first debt is paid off, allocate the extra funds towards the next debt. Repeat until all your debt is paid off. The Snowball Method In contrast, the...