Debt Avalanche Method
What Is the Debt Avalanche Method?
The debt avalanche is a repayment strategy where you pay off debts with the highest interest rate first.
This method minimizes total interest paid over time.
Why the Debt Avalanche Works
It focuses on:
- Reducing interest costs
- Maximizing efficiency
- Shortening total repayment time
It is mathematically optimal but may feel slower emotionally.
Example
Debts:
- Credit card at 24%
- Personal loan at 10%
- Auto loan at 6%
You attack the 24% debt first.
Related Terms
