Maya is a mother of two. She and her husband of 5 years have been working to build a house together. So far she has taken a personal loan, a house loan and an education loan to complete her MBA. Recently, she got promoted so she plans on using the extra funds to pay back her loans one by one. 

In her pursuit of a practical solution, she discovered the debt avalanche method to handle her debts with a better strategy. Using this method, she found the fastest way to clear her debts by understanding which loan to clear off first.

So what is the debt avalanche method?

The debt avalanche method helps you minimise the amount of interest paid over time. By tackling debts with the highest interest rates first, this method helps you repay your debts in a shorter time. Which in turn reduces the amount you have to pay back as interest.

We know it can be overwhelming to look at your debt but don’t let it collapse your spirit!

It’s like they say, to get many difficult tasks done, it is best to start with the hardest. Be it in everyday life or debts, this strategy works best. Not only does it take away a big chunk of work off your plate, but half the battle is already won if you finish off the biggest challenge first. Right?

How does this method work?

By prioritising high-interest debts, you minimise the overall interest accumulation and accelerate your debt reduction. 

Advantages vs Disadvantages of the Debt Avalanche Method

The key to ace this method is delayed gratification. You will have to control your urge to spend the extra funds instead of repaying the loan. Also, try to avoid taking on new loans.

Patience is a mandatory virtue for you to win this!!

Remember how Bahubali’s mother waited for 25 years to finally realise her dream of meeting her son? Waiting is hard but totally worth it!

Things to keep in mind  when using  this method 

⚠️Income stability: Steady income allows you to dedicate more funds towards the highest-interest debt while making consistent minimum payments on other debts. If you have uncertain or irregular income, weigh your options carefully before implementing this method. 

⚠️Commitment and discipline: The debt avalanche method requires self-discipline since you will have to prioritise one debt above the rest, regardless of balance and emotional attachment. You will need to monitor your spending habits to make sure you consistently follow the regime, nobody else will be coming to monitor you. 

⚠️Maintaining minimum payments: It is crucial to continue minimum payments on all other debts while implementing the debt avalanche method. This is mandatory for maintaining financial stability and avoiding penalties or negative impact on your credit score.

By prioritising debts based on interest rates, you can

• Minimise interest payment
• Become debt-free in shorter time and 
• Avoid Getting Stuck in a never-ending debt cycle 

Remember to assess your financial situation,  stay disciplined and be committed to making consistent payments. Take control of your debts today! With this method as your tool

❓Still feel this method is not the right fit for you? Discover the Debt Snowball Method instead – a strategy that focuses on small victories and momentum by paying off smaller debts first!