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By taking into account the interest rate and amount of debt, debt stacking identifies a way for you to pay off your debts. You begin by making consistent payments on all of your debts. The debt that debt stacking suggests that you pay off first is called your target account. When you pay off the target account, you roll the amount you were paying toward your next target account. As each debt is paid off, you continue this process. Debt stacking allows you to make the same total monthly payment each month toward all of your debt and works best when you do not accrue any new debts. You continue this process until you have paid off all of your debts. When you finish paying off your debts, you can apply the amount you were paying towards your debt toward creating wealth and financial independence!
This example is hypothetical and does not represent an actual investment. This uses a nominal 9% rate of return, compounded monthly. It uses a constant rate of return, unlike actual investments, which will fluctuate in value. It does not include fees and taxes, which will lower results.