When it comes to paying off debt, two strategies dominate the discussion: the debt snowball and the debt avalanche.
Debt Snowball Method
Pay minimums on all debts except the smallest balance. Attack the smallest debt with everything extra you have. Once it's paid off, roll that payment into the next smallest debt.
Debt Avalanche Method
Pay minimums on all debts except the one with the highest interest rate. Focus all extra payments on this high-interest debt until it's gone.
Which is Better Mathematically?
The debt avalanche saves more money in interest payments. If you're purely logical and disciplined, this is the superior method.
Which Works Better Psychologically?
The debt snowball provides quick wins that build momentum. For many people, these small victories keep them motivated to continue.
Hybrid Approach
Consider starting with the snowball method for motivation, then switch to avalanche once you've built momentum.
The Real Answer
The best method is the one you'll actually stick with. Choose based on your personality and financial situation.