Avalanche Method: An aggressive way to slash your debt

If you're in debt, like 75% of Americans are, you may wonder what the best way to pay it off is. That depends on your personality, the type of debt you have, and the amount of debt you have. If the Snowball Method is too tentative, you may prefer the more aggressive Avalanching.

The avalanche method is a debt repayment strategy in which the individual prioritizes paying off their debts with the highest interest rates first, while making minimum payments on the remaining debts. This method is intended to minimize the amount of interest paid over time.

The origin of the avalanche method isn't clear, but it's a widely recognized strategy for managing and paying off debt. It is not associated with any particular individual or organization, but has been popularized and recommended by personal finance experts.

The steps for implementing the avalanche method are:

1. List all debts: Make a list of all outstanding debts, including the creditor, balance, interest rate, and minimum payment due for each.

2. Calculate interest costs: Calculate the total interest cost of each debt over time.

3. Order debts by interest rate: Order from highest to lowest interest rate.

4. Pay minimum payments: Make minimum payments on all debts.

5. Attack high-interest debt: Also pay as much extra as possible toward the debt with the highest interest rate.

6. Repeat: Once the debt with the highest interest rate is paid off, move on to the debt with the next highest interest rate, repeating the process until all debts are paid in full.

It is important to keep track of progress, regularly review the debt list, and adjust if needed.

The avalanche method of debt repayment is best for individuals who prioritize saving money and reducing the amount of interest paid over time. It's a more methodical and strategic approach to debt repayment that may be appealing to those who are disciplined and focused.

However, it is not necessarily the best option for everyone. Individuals who are easily overwhelmed may find the snowball method, which prioritizes paying off smaller debts first to build momentum, more effective for maintaining motivation and staying on track.