 TITLE: The Debt Avalanche Method: How It Works and When to Use It CONTENT: The debt avalanche method eliminates your most expensive debts first, earning you returns on your money more quickly. Think of it this way: Say you have a student loan that carries a 6.8% interest rate annually. When you pay it off, your budget earns back the equivalent of that interest since you're no longer making payments on the debt.\nLoans and credit cards generally collect interest on top of the principal balance you've borrowed, or on top of the credit card charges you've made, as a fee for borrowing money. Taking on debt can end up being far more expensive than you initially planned, largely because of compound interest. That means that as interest is added to your debt, further charges are calculated based on the new, larger total. Your minimum payment might not be enough to cover all the interest that's accumulated over time.\nWhen you get rid of debts using the debt avalanche method, you stop the growth of compound interest and save the most in interest by attacking those debts with the highest interest first. END