How to get out of debt: snowball or avalanche method (with an example)
Having several debts at once —the credit card, the car loan, the phone instalments, the overdraft— is stressful for one specific reason: you don’t know where to start. You pay a bit of everything, the interest keeps running, and you feel like you’re running without moving forward.
The good news is that getting out of debt isn’t a matter of luck or of suddenly earning more. It’s a matter of order. There are two proven methods for deciding which debt to attack first, and choosing well can save you money, months of stress, or both. Here are the two, with a numeric example so you can see the real difference.