The debt avalanche method involves making minimum payments on all debt and using any extra funds to pay off the debt with the highest interest rate. Here’s how it works: ➡ Step 1: Order debts from biggest to smallest. ➡ Step 2: Pay minimum on every debt except the highest interest. ➡ Step 3: Put all extra money towards the highest interest. ➡ Step 4: Rinse and repeat until debt free. For example, say you have P3,000 extra to devote to debt repayment each month, and you have the following debts: P10,000 credit card debt at an 18.99% annual percentage rate (APR) P9,000 car loan at 3.00% interest rate P15,000 student loan at 4.50% interest rate In this scenario, the avalanche method would have you pay off your credit card debt first because it has the highest interest rate. If you put your extra money toward that debt, you could pay off your remaining debt in 11 months, paying a total of P1,011.60 in interest. If you have significant amounts of debt, the avalanche method of targeting the highest interest rate debt can also reduce the time it takes to pay off the debt by a few months.