How Money Works · 2 min read
Good Debt, Bad Debt and Getting Out
When borrowing can help and when it hurts, plus the snowball and avalanche methods for paying off debt.
Debt isn't automatically bad. A reasonable mortgage or a loan for training that raises your income can help build a life. High-interest debt for things that lose value quickly is another story.
Questions to ask before borrowing
- Will this help me earn more or build something lasting?
- What's the APR and total cost?
- Can I afford the payment if money gets tight?
Two ways to pay it off
Debt snowball: pay minimums on everything, then put extra money toward the smallest balance first. Quick wins build momentum.
Debt avalanche: put extra money toward the highest interest rate first. This saves the most money.
Either works if you stick with it. Try our debt payoff calculator, and if you feel overwhelmed, a nonprofit credit counselor can help for little or no cost.
Updated November 15, 2026. General education only, not financial advice.