How to Use Debt Avalanche to Pay off Your Bills and Get out of Debt

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The debt avalanche method could put you on the road to financial freedom. | jacoblund/iStock/Getty Images

If you’ve gotten to the point where you feel like you’re suffocating under the weight of your debt, it’s time to develop a payoff strategy. You might be familiar with the debt snowball method, but there’s another way to pay down debt you might not be familiar with. It’s called the debt avalanche method, and it can help you get rid of your debt once and for all.

Here’s how to use the debt avalanche method to pay off your bills and get out of debt.

What is the debt avalanche method?

The debt avalanche is a type of debt payoff plan. The goal is to aggressively pay down debt that’s costing you the most money when it comes to interest payments. Using the debt avalanche method can help you pay down your debt while saving you more money on interest charges. This strategy is used until all debts are paid off.

How the debt avalanche works

Start by listing your debt from the highest interest rate to lowest. After that, decide how much more you can pay above the monthly minimum payment. Put the most money toward the debt with the highest interest rate first. After that debt is satisfied, take the money you used to pay that debt and roll it over toward payments on the debt with the next highest interest rate. Monitor credit cards that have a promotional interest rate, so when it ends you can revise the order of your debts so you’re still on track with your payment goals.

Winning the debt game

Were you lucky enough to get a windfall? You can pay off your debt even faster by using extra cash to pay down your debt. Instead of giving in to the temptation to treat yourself, commit to attacking the debt with any additional funds that come your way. When you develop laser-sharp focus, you can destroy your high-interest debts and get on the road to financial freedom.  

Tips for using the debt avalanche method

  • Be patient. Using the debt avalanche won’t get you out of debt overnight. This method takes a bit longer because your high-interest debt might be larger. Sticking to this plan will take time, so be patient.
  • Track progress. Life gets busy, so it’s easy to get off track if you don’t monitor your progress. It will be easier to stay on track if you keep a close eye on how you’re doing with paying down debt. One way is by entering your balances into an Excel spreadsheet. Another way to monitor your debt payoff is to use a debt avalanche calculator or app.
  • Decide which method works best for you. You might decide somewhere down the road that the debt avalanche method isn’t for you. If that’s the case, it’s perfectly fine to use another method that better fits your needs and money personality. For example, you might decide to try the debt snowball method or the debt tsunami method.

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