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Okay.
Onto the newsletter!
When you're an super awesome financial YouTuber (like me), people ask you ALL THE TIME how to pay off debt.
Lucky for them, I love this shit.
(Not as luck for them, they're typically fucking it up...)
So.
There are two popular ways to pay off debt.
The snowball method (smallest balance first) and the avalanche method (highest interest rate first).
And both of them work.
I mean that. Either one beats the alternative, which is doing nothing and paying Capital One to exist.
But one of them saves you more money.
While I may be biased (I am), the avalanche is my favorite method to tackle credit card debt.
Here's why.
How the avalanche works:
You make minimum payments on every debt you have. Every single one. On time, every month.
Then you take every extra dollar you can find, and you hurl it at the debt with the highest interest rate first.
When that one's dead, you roll what you were paying on it into the next highest rate.
And so on.
Until there's nothing left.
That's it. That's the method.
Here's why it matters.
Check this shit out: if you have a credit card with a five thousand dollar balance at twenty-two percent APR and you're only paying the minimum (around one hundred and twenty-five dollars a month) you'll be paying on that card for over six years.
Total interest paid? Over four thousand dollars.
On FIVE THOUSAND DOLLARS.
For those of you who failed math, that's $9K.
You would pay back more than nine thousand dollars for something that cost five.
That's not debt. That's a penalty for being dumb.
The avalanche attacks that rate first because interest is the enemy. Not the balance.
The balance is just what you owe. Interest is what's actively growing while you sleep.
And if you just NEED a credit card, please take this quiz before you open a new account.
Now — about the snowball.
I'm not here to bury it.
The snowball method closes accounts faster. Smaller balances fall first, so you get wins early and often, and for a lot of people, that momentum is the difference between staying on a plan and abandoning it.
If that's you, the snowball is a great method. Use it.
What I'd push back on is the idea that the emotional win and the financial win have to be separate.
Because with the avalanche, when that first account finally dies, you know, the one that's been bleeding you the most, the one with the rate that made your stomach drop every time you opened the app...
That feeling is something else.
It's not just "one less thing." It's the weight that cost you the most, every single month, finally gone.
The number that was quietly wrecking your progress, the one you dreaded looking at, zeroed out.
I'm not gonna say it's better than sex, but...
What "aggressive" actually looks like:
Most people think they're paying off debt aggressively.
They're not.
Red flags:
- You're paying more than the minimum but less than you realistically could
- You're also "investing" while carrying high-interest debt
- You still eat out multiple times a week
- You have a subscription you forgot about
- You consider a night in "saving money"
Aggressive means you have identified every dollar leaving your account and made a conscious decision about each one.
Aggressive means discretionary spending is audited, not just "watched."
Aggressive means you treat your highest-interest debt like it's trying to rob your house.
Because financially? It is.
The number that should scare you:
The average American carries around six thousand dollars in credit card debt.
At the average interest rate of around twenty-one percent, that's roughly one thousand, two hundred and sixty dollars a year in interest alone.
That's money you are paying to exist in debt.
Not to pay it off. Just to stay in it.
The avalanche method isn't a trick, it's the mathematically most efficient way to get out of your shitty situation.
Pick the method that gets you moving.
Then don't stop.
Taquitos,
Caleb "Avalanche" Hammer
P.S. Speaking of credit cards...
If you need a little more guidance on the best cards, what to look for, etc.
CLICK HERE to take my new credit card quiz!
Talk soon.
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