Today on our journey to financial freedom, we’ve reached Day 8, and the topic is – “How to Get Out of Debt?”
Credit card bills, personal loan EMIs, money borrowed from friends – together, these can feel like a huge burden. But don’t worry – there are two powerful debt repayment strategies that can help you become debt-free faster: Debt Snowball and Debt Avalanche.
⛄ Debt Snowball Method (Start with the Smallest Debt)
This approach is based on psychological motivation. You pay off your smallest debt first, regardless of interest rate, to gain confidence and momentum.
📌 How to do it:
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List all your debts in order from smallest to largest amount.
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Pay the minimum amount on all debts except the smallest one.
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Put any extra money towards clearing the smallest debt first.
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Once that’s done, move to the next smallest debt.
📈 Benefit:
Every time you clear a small debt, your confidence grows. It builds the “I can do it” mindset.
📍 Example:
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₹20,000 Credit Card Bill
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₹50,000 Loan from Friend
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₹2,00,000 Personal Loan
Pay off the credit card first, then the friend’s loan, and finally the personal loan.
🏔 Debt Avalanche Method (Start with the Highest Interest Debt)
This approach is based on logic and money-saving. You pay off the debt with the highest interest rate first to save more in the long run.
📌 How to do it:
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List all debts in order of highest to lowest interest rate.
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Pay the minimum amount on all debts except the one with the highest interest rate.
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Focus extra payments on that high-interest debt.
📈 Benefit:
You save thousands of rupees in interest over time. It’s the most financially efficient method.
📍 Example:
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₹50,000 Credit Card (36%)
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₹2,00,000 Personal Loan (14%)
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₹80,000 Bike Loan (11%)
Pay off the credit card first, then the personal loan, and finally the bike loan.
✅ Which Method is Right for You?
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If you want quick wins and motivation – choose Debt Snowball.
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If you want to save the most money in the long term – choose Debt Avalanche.
📝 Action Plan for Today:
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Take a notebook and list all your debts (amount + interest rate).
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Decide which method suits your personality and financial goals.
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Stick to your plan and make consistent progress every month.
What about you? Which method will you choose – Debt Snowball or Debt Avalanche – and why? Share in the comments!
See you tomorrow for Day 9 of our financial wisdom series. 💰
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