Financial literacy education for the modern era.
Debt Payoff Strategies
Two popular approaches to paying off debt: the mathematically optimal Avalanche method and the psychologically powerful Snowball method.
Payment Order
Focus extra payments on highest interest rate first
Debt Avalanche
Mathematically optimal. You target the highest interest rate debt first, minimizing total interest paid over time.
Advantages
- +Saves the most money on interest
- +Mathematically optimal approach
- +Faster total payoff time
- +Best for those motivated by numbers
Disadvantages
- -May take longer to see first debt paid off
- -Can feel slow if high-rate debt is large
- -Requires discipline without quick wins
How Both Methods Work
List All Debts
Include balance, interest rate, and minimum payment
Make Minimums
Pay minimum on all debts to avoid penalties
Focus Extra
Put all extra money toward your target debt
Roll Payments
When one debt is paid, add its payment to the next
Which Should You Choose?
The best method is the one you'll stick with. The Avalanche saves more money, but the Snowball has higher completion rates because of its psychological benefits.
Consider: If you're analytical and motivated by numbers, try Avalanche. If you need quick wins to stay motivated, try Snowball.