Greetings

So, the debt avalanche method, uh, I would say it is inferior to the cash flow index method.

What this method does: it involves listing your debts from the highest interest rate to the lowest. So instead of focusing on the balance, you target the debt with the highest interest rate first.

This way you reduce the amount you spend on interest, which can save you a significant amount of money in the long run. So let's go ahead and give you an example of what we mean by that.

We're actually going to look at the credit card, right? So for example, say you have a credit card with 20 percent interest, a student loan with 6 percent interest and a mortgage with 4 percent interest. You'd attack that 20 percent interest credit card first.

Do you know why?

Because it is the highest interest rate. Now, something that you may have not known is that the credit card and the mortgage, that interest is actually calculated differently. So, the bankers would have you think that that 4 percent is actually lower than the credit card interest of 20%.

No.

That 4 percent can actually equate to 70 percent or maybe 80 percent mortgage. Because it is calculated differently. It is the difference between Celsius and Fahrenheit. Let me ask you a question. Is 2 degrees Celsius the same as 2 degrees Fahrenheit?

Ask any Eskimo. Okay. And they'll tell you, uh, no, it's, definitely different.

Why? Because the scale is different. The calculation is different. And so it is with mortgage and credit cards. So just keep that in mind when we are talking about debt elimination techniques.

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CJ Wallace