List your debts and how much you can pay each month. See your debt-free date, how much interest you will pay, and which order works best for you: the avalanche or the snowball method.
| Name | Balance | Rate % | Minimum |
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With the avalanche method, the extra money goes to the debt with the highest interest rate. Mathematically this always costs the least interest. With the snowball method, the extra goes to the smallest balance, so you close whole debts sooner. Many people find those quick wins help them stay on track.
If the difference in the comparison table is small, choose the one you will actually stick to. If the avalanche saves a lot, it is worth the patience.
Example: a credit card of 4,000 at 24% (minimum 100), a personal loan of 6,000 at 10% (minimum 180) and a store card of 900 at 15% (minimum 40). Total paid each month: 450.
Avalanche (credit card first): debt-free in 29 months, about 2,055 in interest. Snowball (store card first, gone in month 6): 30 months, about 2,152 in interest. The snowball costs about 100 more but gives a quick first win.
You pay the minimum on every debt and put every extra amount on the debt with the highest interest rate first. When it is paid off, you move to the next highest rate. It saves the most interest.
You pay the minimum on every debt and put every extra amount on the smallest balance first. Small debts disappear quickly, which keeps many people motivated, even if it costs a little more interest.
Its minimum payment stays in your monthly budget and moves on to the next debt in your plan. That is why the payoff speeds up over time.
Either the monthly total is lower than the minimum payments, or it is so close to the monthly interest that the debt hardly goes down (more than 50 years). Increase the monthly amount, or look for a lower interest rate.
Keep a small emergency fund first, so an unexpected cost does not go on a credit card again. After that, paying off high-interest debt is usually one of the best returns you can get.
A calculator gives you one answer. A cashbook shows you the whole picture: write down cash in and cash out, see where the money goes in charts and on a calendar, and share a ledger with your family, team or friends.
This takes a few seconds.
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