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Debt Avalanche Method

The debt avalanche method is a way to pay off debt by sending extra money to the balance with the highest interest rate first. You still make the minimum payment on all other accounts. This strategy can help you save on interest and may help you pay off debt faster, depending on your situation.

What Is the Debt Avalanche Method?

The debt avalanche method is an extra payment strategy that focuses on interest rates. When you reduce the balance with the highest interest first, less interest builds over time. This can shorten your payoff timeline and lower total costs. Everyone’s situation is different, and results vary.

How the Debt Avalanche Method Works

  1. List all your debts
    Write down every balance, interest rate, and minimum payment. You can use a simple chart or a debt payoff calculator basics worksheet.
  2. Sort your debts by interest rate
    Place the highest interest first and the lowest interest last.
  3. Set automatic minimum payments
    Automatic payments can help you avoid late fees and keep your payment schedule steady.
  4. Send all extra money to the highest interest debt
    This is your top target. Any extra amount goes to that one balance until it is fully paid.
  5. Repeat the process
    Once the highest-rate balance is gone, move the extra money to the next highest interest account.Once the highest-rate balance is gone, move the extra money to the next highest interest account.

Tips for Success

  • Build a small emergency fund so an unexpected expense does not interrupt your plan.
  • Review your budget often.
  • Track your progress each month.
  • Ask your lender questions about due dates or payment options. Terms vary by state and by product.

For example, some borrowers use installment loans as part of their financial plan. Options and timing vary by state, and funds from new loans may be available as soon as the same day, where available and if approved. Visit your state page for local details.

Pros of the Debt Avalanche Method

  • Helps reduce total interest paid
  • Can speed up debt payoff compared with random payments
  • Easy to follow once set up
  • Works well with a clear payment schedule

Cons to Consider

  • Some high-rate debts may take time to pay down
  • Requires steady extra payments
  • Not always the best fit if you need quick wins for motivation

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Summary

The debt avalanche method helps you focus on the highest interest rate first so you can save on interest and make steady progress. You sort your debts, pay minimums, and send extra money to the top balance until each debt is gone. If you’re exploring your options, you can apply online or visit a nearby LendNation store for more information about available products in your state.