1. The Snowball Method (The Momentum Builder)
How it works: List debts from smallest balance to largest. Ignore interest rates. Pay minimums on everything, but throw all extra cash at the smallest debt.
Why it works: When you clear a ₹10,000 debt in 2 months, you feel a rush of victory. This psychological boost keeps you motivated to tackle the larger ₹50,000 debt next. It's best for people who feel overwhelmed.
2. The Avalanche Method (The Interest Destroyer)
How it works: List debts from highest interest rate to lowest. Ignore balances. Attack the debt with the highest rate (usually Credit Cards) first.
Why it works: Every day you hold high-interest debt, you lose money. By eliminating the most expensive debt first, you mathematically minimize the total interest paid. It's best for analytical people who want the most efficient path.
3. The Hybrid Approach
Start with Snowball to clear 1-2 small nuisance debts and simplify your life. Then switch to Avalanche to attack the big, high-interest loans.