Key Takeaway
Debt avalanche targets the highest-interest debt first while making minimum payments on others. Compared to snowball method, it saves 15–20% more in total interest , making it the mathematically optimal strategy.
Debts Setup
Avalanche vs Minimum Payments:
- Minimums Only: Timeline is 4 Years 0 Months, with total interest of ₹97,610.
- With Avalanche: Payoff timeline drops to 2 Years 1 Months.
- You save ₹49,483 and become debt free 23 months sooner!
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Frequently Asked Questions
What is the Debt Avalanche method?
It is a debt reduction strategy where you list all your debts in descending order of interest rate. You pay the minimum on all debts, and throw all extra cash at the debt with the highest interest rate first.
Does Avalanche save more money than Snowball?
Yes. The Debt Avalanche is mathematically optimal. By prioritizing high-interest debts first, you save the maximum amount of interest compared to the Snowball method (which prioritizes small balances).
When should I choose the Debt Avalanche method?
Choose it if you are motivated by mathematical savings and want to pay the least amount of total interest over your debt-free journey.
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