{"id":55704,"date":"2023-09-01T09:31:18","date_gmt":"2023-09-01T13:31:18","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/the-debt-pay-off-strategy-youve-likely-never-heard-of\/"},"modified":"2023-09-01T09:31:20","modified_gmt":"2023-09-01T13:31:20","slug":"the-debt-pay-off-strategy-youve-likely-never-heard-of","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=55704","title":{"rendered":"The Debt Pay Off Strategy You\u2019ve Likely Never Heard Of."},"content":{"rendered":"
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When it comes to financial goals & milestones, being debt free ranks at the top of the list for many people. The idea of debt for some, feels like a burden and a weight that can make it prohibitive in the process of achieving wealth.<\/p>\n

It\u2019s no secret that with rising cost of living, wages that haven\u2019t kept pace with inflation, and billions of dollars spent every year in marketing to drive consumer spending, the fight to overcome debt can feel like an effort in futility.<\/p>\n

Fundamentally, there are a couple of tried and true methods that are well known and so as the gold standards of debt pay-off strategy. Those methods are; the snowball method<\/u><\/em> and the avalanche method<\/u><\/em>.<\/p>\n

The Snowball Method<\/strong><\/h2>\n

The snowball method is the debt payoff strategy that has you focus on the lowest balance debt you have first, allocating any Additional resources earmarked for debt payoff to be used to eliminate your debts in order from lowest to highest balance.<\/p>\n

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This method has been said to be more psychologically rewarding<\/em>, as you get the opportunity to have early wins as you eliminate your smaller debt balances. Then you build momentum as you allocate the newly free cash flow, to tackle the next balance in line. While this is a popular method to pay off debt, it may not always be the most mathematically correct approach, as the focus is to focus on the smallest to largest balance, irrespective of interest rate.<\/p>\n

The Avalanche Method<\/strong><\/h2>\n

The Avalanche method requires that you focus on the highest, to lowest interest rate. This methods claim to fame is helping you pay off debt in the most mathematically correct method<\/em>, which will save you more money in interest. While this may seem like the obvious choice, this method may be a little more mentally tough to tackle as your debt with the highest interest, could also be your debt with the highest balance balance, meaning, it could potentially be awhile before you see a debt completely eliminated. While you will be making progress chunking away at it, you may not get that rewarding sense of gratification seeing an account balance hit zero as quickly as the avalanche method.<\/p>\n

While these two methods are time-tested strategies of debt payoff, In my quest to always try to find new and innovative ways of approaching personal finance, I stumbled upon a debt pay off method that I thought was really strategic and impactful but not widely discussed.<\/p>\n

The Cash Flow Method<\/strong><\/h2>\n

This particular method of debt payoff doesn\u2019t focus on either interest rate or balance size, instead, it focuses on which debt has the most significant impact on your monthly cash flow<\/em>.<\/p>\n

For example sake, let\u2019s look at this scenario<\/p>\n