You've realized the error of your debt-ridden days, and it's time to turn things around. But tackling debt can quickly feel like you're in over your head. Here are two major ways to go about it explained.
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00:00You've realized the error of your debt-ridden days, and it's time to turn things around.
00:07But tackling debt can quickly feel like you're in over your head.
00:11Here are two major ways to go about it.
00:15The snowball method is one of the most recommended ways to ditch debt, since early wins can keep
00:20you motivated.
00:21Start by listing all your debts from lowest to highest, then pay as much as possible on
00:26the one with the smallest balance, while paying just the minimum on the others.
00:31Once you knock that debt out, move on to the next smallest debt, and so on.
00:35This snowballs until you're debt-free.
00:39The avalanche method is mathematically the best way to banish debt, especially if you
00:43have some high-interest accounts.
00:45Again, list out all your debts, but this time do highest to lowest interest rates, and then
00:50work on paying down the one with the highest interest rate while paying the minimum on
00:55the others.
00:56This way you can save hundreds, even thousands, on interest payments, potentially lowering
01:00the time it takes to pay off your debt by months.