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How to pay off your debt

by | Jan 11, 2022 | Personal Finance

Everyone keeps preaching that you should pay your debts – but no one ever explains how to do it. Here,  are the most common debt repayment methods.

 

Snowball method:

With this method you pay your smaller debts first. Psychologically, this method works well – because there is a real sense of achievement when you can square up an account, close it and move onto the next one.

 

Avalanche method:

With this method, you pay down debt with the highest interest rate first. You’ll save money in the long run by keeping interest charges under control.

  • First pay the minimum payment on all of your debts.
  • Secondly, put any additional money toward the account with the highest interest rate. Then continue to do this until the high-interest account is paid off.
  • Thereafter, take the minimum payment you were paying on the first debt, as well as any additional cash, and put that toward the account with the next-highest interest.

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