Why high-interest debt is the priority

Interest on debt like credit cards or short-term consumer loans often exceeds what most safe investments can realistically earn. Paying down high-interest debt is effectively a guaranteed "return" equal to the interest rate you stop paying.

The avalanche method

List debts by interest rate, highest first. Pay minimums on everything except the highest-rate debt, and put any extra money toward that one until it's cleared, then move to the next highest. This minimizes total interest paid.

The snowball method

List debts by balance, smallest first, regardless of rate. Clear the smallest balance first for a quick win, then roll that payment into the next smallest. This can pay more total interest than the avalanche method, but the early wins can help some people stay motivated.

Avoid adding new debt while paying down old debt

Progress can stall quickly if new balances accumulate while you're working through existing ones — it helps to pause discretionary borrowing (e.g. new credit card spending) during this period.

After the debt is cleared

Redirect the amount you were putting toward debt into your emergency fund and then investments — the "payment" you were already used to making doesn't have to disappear from your budget.