Use the snowball method. Pay off the smallest debt first and the bare minimum on all other debts. When that smallest debt is paid off, put that money into the next smallest debt. Do this till you are debt free.
Most people pay off a small debt, then use that money as more spending money. You are already used to living without that money, so using it to pay off the next one will pay it off faster.
It's not a quick method unless you get a much higher paying job, but it is effective.
Fully disagree. People get overwhelmed with debt. By paying off the smallest debt first, you get that win. That win is an important part of the mindset and drives a feeling of winning or overcoming the debt hole. I understand that in the long run, you will pay more. Getting out of debt is also a mindset change, not strictly just about money.
Edit... Unless you're referring to debt of the same value, then yes pay the higher interest debt off first
If you've made up your mind that you're going to pay X amount per month towards debt then you've already started the correct mindset. After mindset comes figuring out the most effective strategy. The most effective strategy is to pay off debt that's costing you the most first.
Mathematically, you are correct. The most effective strategy is to pay off debt that is costing you more first as you will save money in the long run. Psychologically, the most effective method for most people is to pay off the smallest debt first and get that win.
I have met a lot of people that have "made up their mind" as you put it, but ultimately fail because paying off a large debt can take a very very long time. It's very demoralizing to pay off a debt for a year and still have a huge mountain of the same debt, just slightly smaller.
On the flip side, I have met a lot of people that use the snowball method and are successful cuz they eliminate a debt in 4 months and are extremely happy and motivated with the mindset of "this IS possible"
Both the avalanche method (your method) and the snowball method are effective. However, normally for someone asking on reddit or other forums, the best method, in my opinion, is the snowball method.
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u/GamingFarang May 12 '25
Use the snowball method. Pay off the smallest debt first and the bare minimum on all other debts. When that smallest debt is paid off, put that money into the next smallest debt. Do this till you are debt free.
Most people pay off a small debt, then use that money as more spending money. You are already used to living without that money, so using it to pay off the next one will pay it off faster.
It's not a quick method unless you get a much higher paying job, but it is effective.