Question

If you're using the High Rate (Debt Avalanche) Method, how do you organize your debts?

Answer 1

In the High Rate (Debt Avalanche) Method, debts are organized by prioritizing them based on their interest rates. The debt with the highest interest rate is paid off first, followed by the next highest interest rate debt.

Step-by-step explanation:

In the High Rate (Debt Avalanche) Method, you organize your debts by prioritizing them based on their interest rates. You focus on paying off the debt with the highest interest rate first, while making minimum payments on the rest. Once the highest interest rate debt is paid off, you move on to the next highest interest rate debt, and so on.

For example, let's say you have three debts:

1. Credit Card A with an interest rate of 18%
2. Student Loan B with an interest rate of 6%
3. Car Loan C with an interest rate of 3%

In this case, you would focus on paying off Credit Card A first, as it has the highest interest rate, while making the minimum payments on Student Loan B and Car Loan C. Once Credit Card A is paid off, you would move on to Student Loan B, followed by Car Loan C.