Method:
List out all your debts by balance from smallest to largest, regardless of interest rate
Work out your budget to make minimum payments on all of them
With your remaining budget pay off the debt with the smallest balance first
Once the smallest is paid off, then take the next smallest and so on
For example: you have a 10k credit card with 18% interest, 1k overdraft with 15% interest and 5k car loan with 3% interest. You would make minimum payments on all three and then pay off the overdraft first, then the car loan and then the credit card.
Pros: Motivating strategy to pay off debts as you reach a specific goal quicker, which provides gratification. It’s easy to implement and easier to stick to than the debt avalanche method.
Cons: Costs more money than debt avalanche method, and therefore could take longer to be debt free. Assumes you can pay more than the minimum balance across all debts.