So You Want To Tackle Your Debt Like a Pro… (An Illustrated Guide)

An Illustrated Guide To The Debt Avalanche Method

Tackle Debt: Step 1

1. Take stock of your debt
List your debt in order of highest interest rate (ouch) to lowest interest rate (only slightly less ouch). Include ALL loans to be repaid. Yes, even those student loans from those three years in college when you thought you were destined to be a Beatles historian. (Don’t worry about that… we’ve been there too!)


Tackle Debt: Step 2

2. Schedule your due dates
Call your creditors and set your payment due dates to a date every month when you know you’ll have cash. While you’re at it, take the opportunity to ask for a lower interest rate if you qualify. Tip: charming smiles don’t translate through the phone but it never hurts.


Tackle Debt: Step 3

3. Start your avalanche
Optimize and focus your payments by paying minimums on each of your debts and sending extra money to the highest interest debt until it’s paid off. Then, move on to the next one. By the way, this avalanche is ski-lodge optional.


Tackle Debt: Step 4

4. Automate and share the work
No need to tackle repayment all on your own. Use online tools like ReadyForZero or your online banking options to automate your payments. Less time spent scheduling payments means more time throwing parties! Or watching Hulu. In the perfect


Tackle Debt: Step 5

Bonus Tip: Sell Your Lamps…
or your unused blender or your old guitar. If you can increase your cash flow, you can apply the earnings to the highest interest loan. Plus—then you can check spring cleaning off your to-do list.

Illustrations courtesy of Ted Slampyak

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  • miketheman


    Quick question about credit cards…. If someone had access to say 10 credit cards, with a $500 limit each, and each with a 15% interest rate- would one be able to, say, max out half of the cards, and then perpetually transfer the full amount owed each billing cycle before interest kicks in? I am new to credit cards, and Im sure theres a limit to the amount of transfers that could be done but i was just curious thanks!

    • To be honest, I’m not sure of all the implications of the strategy you’ve outlined. On the surface, it seems like you could pay off some credit cards with others. But I’m not sure about all the rules and fine print that may be on those agreements. If you find any good resources on this topic, please let us know!