Debt Repayment
Understanding how to pay off debt efficiently
What is debt repayment?
Debt repayment is the process of paying back borrowed money over time. It typically involves making regular payments that reduce both the principal and any accrued interest.
The Snowball method
The Snowball method focuses on paying off the smallest debts first. By eliminating small balances quickly, this approach builds motivation and helps maintain consistency.
Order: $500 → $2,000 → $5,000
The Avalanche method
The Avalanche method prioritizes debts with the highest interest rates. This strategy minimizes total interest paid and is mathematically optimal for reducing long-term costs.
Order: 22% → 15% → 6%
Which method is better?
Both methods are effective. The best choice depends on personal preferences, motivation, and financial discipline. Many people combine both approaches.
How to get started
Begin by listing all debts, balances, and interest rates. Then choose a repayment strategy and track progress consistently.