“Some debts are fun when you are acquiring them, but none are fun when you set about retiring them.” - Ogden Nash


Managing finances while in debt is a difficult job. But, you have no other option other than paying it off and managing finances at the same time.

Today I’m going to guide you how to pay back debt with the help of debt stacking method (commonly known as the debt avalanche method).

Have a look:

1. Don’t make new debts

Most people are ignorant about how to handle finances and stay within their means. As a result, they land up in debt. If you’re one of them, the first thing you should do is stop gathering new debts. Otherwise, you won’t be able to come out of debt ever.

If possible, make payments in cash and freeze your credit cards or use them only in dire financial situations.

You must remember that you need a peace of mind to manage your finances better which is possible when you stop acquiring fresh debts.

2. Arrange debts by interest rates

Be careful! As banks and other financial institutions are using interest rate to squeeze money from you.

Debt stacking advises you to pay off high-interest rate debt first (which is known as the Target Account/Target Debt) and make minimum payments on the rest of your debts.

This process will continue as long as you don’t pay off all the outstanding balances. As you are paying the highest interest debt first, this stacking method helps you save more dollars on interests and repay dues faster.

3. Reduce interest rate

Since interests eat up most of your money try to lower them as much as you can.

You can do this by transferring all your balance to another credit card with a lower interest rate (preferably for a longer period of time so that you can repay the debt completely).

Make sure to read the fine prints carefully so as to avoid any financial hassles later.

4. Make a strategic spending plan

This part is the heart of our financial torso where we have the chance for improvement. Having a weak researched spending plan won’t spare your finances. Your objective should be to lower your expenses than your income so that you have more dollars to pay off dues.

Consider elements such as rent, groceries, utility bills, shopping, emergency fund, retirement fund, and the like while creating the spending plan.

Do it strategically and find places to cut down costs to free up funds for satisfying your dues.

5. Create a repayment plan

Whenever you miss the minimum payment on each debt and the payment on your high-interest rate account, fees start incurring quickly. It increases the amount you have to pay in order to become debt free completely.

Make minimum payments as long as the debt is paid in full. If your minimum payment decreases, your stack repayment (the extra money that you have) increases. You can then use that fund toward paying off the Target Debt faster.

6. Reward your progress

Keep track of your Target Debt to check your progress. Once you cross a milestone celebrate or reward yourself. Though you don’t always need money to celebrate but if it does it’ll come from your strategic spending plan.

This is important as it’ll help you stay motivated and pay off the debt faster.

7. Compound your results

Once you have paid off your Target Account move the stack repayment to the next highest-interest debt which becomes your new Target Debt.

As the number of debt decreases you have more funds to repay the new Target Debts.

Hence, your dues will be paid faster.

8. Stay determined and don’t give up

When you are religiously trying to settle your dues life will test your patience and commitment time and again. You may have to deal with an emergency situation suddenly. This may force you to adopt your old financial habits.

Whenever you face such situations never give up what you’re doing. Instead, stay firm on your decision to become debt free.


What does your debt payback plan looks like? Do share with us.

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