Step-by-Step Strategy to Tackle Loans
List and Organize All Loans
Start by writing down each loan. Use a notebook or digital file.
Gather Key Loan Details
For each loan, note:
Interest Rates
This shows how much extra you pay each year.
Remaining Balance
The amount you still owe.
Next Payment Date
When the next EMI or bill is due.
Prioritizing Loans for Payment
Snowball Method
Pay off the smallest balance first. You gain quick wins. It builds momentum.
Avalanche Method
Focus on the highest interest rate first. You save more money in the long term.
Pros and Cons of Each
- Snowball: Fast wins, but may cost more in interest.
- Avalanche: Saves money, but can take longer to feel progress.
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