Building a Debt Repayment Strategy
Build progressive financial capability through building a debt repayment strategy, moving from understanding to confident application.
5
Lessons in this module
List Every Debt Clearly
Create a complete debt inventory listing every outstanding balance, interest rate, minimum payment, and due date — as the essential first step before any repayment strategy is designed.
Compare Interest Rates
Compare the interest rates on outstanding debts and direct extra payments to the highest-rate debt first — because this minimises the total interest paid over the repayment period.
Choose Avalanche or Snowball
Avalanche (highest interest first) saves the most money; snowball (smallest balance first) gives early wins that sustain motivation. The better method is the one a person will actually stick with to the end.
Avoid Adding New Debt
Adding new debt while repaying old debt cancels out the effort, so the balance barely falls despite consistent payments. Genuine progress requires stopping new borrowing while the repayment plan runs.
Track Progress and Adjust
Review debt repayment progress monthly — comparing actual balance to expected balance — and adjust the plan when a gap is identified before it becomes unrecoverable.
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