Finance

Get out of debt

Two balances, two interest rates, and one spare $300 a month. Where that $300 goes changes the finish line by years.

4 steps 6 min read 3 tools chained Money

List every debt with its real rate

A $2,000 card at 22% and a $9,000 car loan at 7%. Minimums alone are $240 a month, and at that rate the card takes years to clear because most of each payment is interest.

Total owed$11,000
Minimums$240/mo
Card alone, minimum only52 months
Rule of thumbInterest is charged on the balance, so the highest rate is always the most expensive place to leave money — regardless of the size of the balance.
Open Debt Payoff Calculator with these numbers →

Throw the spare money at the worst rate first

Add $300 a month to the 22% card and it collapses. That is the avalanche method: mathematically optimal, because you are always buying down the most expensive debt. The snowball (smallest balance first) costs more but some people stick to it — the tool shows both.

Card cleared in6 months
Saved vs minimums46 months
Rule of thumbAvalanche saves the most money; snowball gives the earliest win. The best method is the one you will actually finish.
Open Debt Payoff Calculator with these numbers →

See what that same money would have earned

Paying off a 22% debt is a guaranteed 22% return — better than any investment you can buy. Run the same $300 a month through compound interest to see what you are giving up, and why clearing high-rate debt comes first.

$300/mo at 7% for 5 years$21,478
Same at 22% (the debt)$32,308
Rule of thumbClearing a debt is a risk-free return equal to its interest rate. Almost nothing else on offer is both that high and that certain.
Open Compound Interest with these numbers →

Then keep the habit, not the payment

When the debt is gone the $540 a month does not have to disappear. Redirect it and the same arithmetic that was working against you starts working for you.

Redirected for 10 years$93,466
Rule of thumbThe month after the last payment is the highest-leverage moment in a budget. Nothing else changes and the money is already spoken for.
Open FIRE Calculator with these numbers →

Same money, very different finish lines

The order you pay debts in is worth years. Put your own balances in and the tool will rank them for you — then run the freed-up payment forward and see what the habit is worth once the debt is gone.

All chains → Next: Retire early Rulebook
Reference only. Stories chain real tools — the numbers shown are worked examples, so check them against your own figures before relying on them.