(Jessica) Welcome to Money Matters on the Southern Bank Financial Wellness Network. I'm Jessica.
(John) And I'm John!
(Jessica) And today we're talking about the debt avalanche approach to debt repayment! John, how does the debt avalanche strategy work?
(John) Well, Jessica, this is a great approach to debt repayment when facing high-interest rates. You order your debts by interest rate from highest to lowest. The plan is to pay off the highest-interest-rate debt first while maintaining the minimum on your other debts.
(Jessica) Right, and once that debt is paid, you'll move on to the next highest-interest debt, and add the extra money used to pay off the first debt to the minimum you were paying on the second. As your payments grow, you'll see your debts diminish faster and faster – like under an avalanche of money!
(John) This is a great approach to saving money in the long run by avoiding high-interest fees. However, keep in mind that the first, biggest payoff may take some time.
(Jessica) Don't get discouraged, and be patient! We'll see you next time on Money Matters. And remember, Financial Wellness starts here!