Debt Avalanche Method: Minimize Interest, Pay Faster

Why Choose the Debt Avalanche Method?🔗

The Debt Avalanche Method prioritizes debts by interest rate, paying down the highest-rate balances first. This approach is mathematically optimal for minimizing total interest paid.

• Saves Money on Interest: By attacking high-rate debts first, you reduce the cumulative interest paid.
• Faster Total Payoff (often): With the same payment amount, targeting high-rate debt typically shortens payoff time.
• May Require Discipline: The results can take longer to feel tangible compared to the Snowball method, which may affect motivation.

How the Debt Avalanche Method Works🔗

1. List All Debts: Document debts with balance, interest rate, and minimum payment.
2. Pay Minimums: Continue minimum payments on all accounts to avoid penalties.
3. Target Highest Rate: Apply any extra funds to the debt with the highest interest rate.
4. Roll Over Payments: After paying a high-rate debt, redirect its payment to the next-highest-rate debt.
5. Repeat: Continue until all debts are cleared, tracking interest savings over time.

Benefits and Considerations🔗

The Avalanche method minimizes cost, but it may feel slower in terms of visible wins compared to methods that target small balances first. Use Finster to simulate and compare timelines and interest costs for Avalanche vs Snowball.

Getting Started with the Debt Avalanche Method on Finster Chat🔗

Use Finster to list your debts, compare total interest and payoff timelines across strategies, and generate a customized payment schedule focused on high-interest debts.