Moneywise
9 min read
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Managing money is a lot like running. Many people dislike it, and most are just trying to reach the finish line without burning out.
But a few are like elite athletes — effortlessly staying ahead of the pack. In fact, you might be managing your finances so well that you don’t even realize you’re part of this high-performing group. According to data from the Federal Reserve, the average American household had a net worth of $1.17 million in 2024 (1).
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For many Americans, debt is a fact of life, with about 90% of adults carrying some form of it, according to Debt.org (2). The bulk of this debt is typically mortgages, which are often considered “good debt” because they can help build equity. On the other hand, if you’ve avoided consumer debt entirely — and especially if you’ve paid off your mortgage — you’re in a rare financial position.
Without the burden of interest payments, you likely have more flexibility to save, invest and grow your wealth, putting you well ahead of the average American.
But for those who are struggling with debt, there are still some options to take into accountaside from the usual suspects like loan consolidation.
The big two methods for paying it down are the avalanche and snowball techniques.
The avalanche method focuses on paying down your highest-interest debts first. This can create a cascading effect where, after the big debt is paid, you knock off the smaller ones quickly.
Meanwhile, the snowball method starts with paying down your smaller debts one after another to build up steam. Then, once you’re down to one debt, you put all your resources into paying it off.
From here, most financial experts recommend building out an emergency fund, then getting to investing as soon as possible. But becoming debt-free is the first, and arguably most important, step.
Read more: Warren Buffett used 8 solid, repeatable money rules to turn $9,800 into a $150B fortune. Start using them today to get rich (and stay rich)’
If you have any retirement savings at all, you’re already ahead of many Americans. About 40% of Americans have no money in retirement accounts at all, according to Gallup (3).
