The Debt Problem
The average American household carries $104,215 in total debt (2024 data). That includes mortgages, auto loans, student loans, and credit cards.
If you have multiple debts, you face a strategic choice: Which one do you pay off first?
There are two dominant schools of thought.
Method 1: The Debt Snowball (Dave Ramsey)
Strategy: Pay minimum on everything, throw all extra money at the smallest balance first.
How It Works
1.List all debts from smallest balance to largest.
2.Pay minimums on everything except the smallest.
3.Attack the smallest debt with every extra dollar.
4.When it is gone, roll that payment into the next smallest.
5.Repeat until debt-free.
Example
| Debt | Balance | Rate | Min Payment |
|---|