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The most problematic debts are often a combination of lingering student loans, large mortgages, expensive auto loans, and high-interest credit card debt accumulated from lifestyle inflation, child-rearing costs, or covering budget shortfalls.
Unaffordable terms, deceptive fees, and high rates make repayment impossible, forcing borrowers to use new loans to cover old ones, creating a cycle of debt.
Even while repaying debt, contribute a small, fixed amount to savings automatically each month. Treat it as a non-negotiable bill. This "snowball" approach for savings builds the habit and provides growing protection.
It leverages behavioral economics, specifically "partitioning," by breaking a large total cost into smaller, seemingly painless payments. This reduces the immediate perceived financial impact and eases the hesitation associated with a large single transaction.
The avalanche method is mathematically superior because it minimizes the total amount of interest you pay over time. This approach saves you money and can help you become debt-free slightly faster.