What is the hybrid (debt ratio) payoff plan?

The idea behind the Debt Hybrid (Debt Ratio) plan is to bring together the best parts of the snowball and avalanche payoff methods so that you can pay debts off quickly and effectively while at the same time maintaining your motivation.

The snowball debt payoff method is popular because it allows you to quickly accumulate “victories” by completely paying off smaller debts quickly. The downside is that it can allow some higher interest rate loans to stick around longer then they should. Conversely, the best part of the avalanche payoff method is that it is the most mathematically effective way to pay off your debt. The bad part about it is that it may take quite a while to get your first payoff victory. That’s where the debt-to-interest rate ratio plan comes into play. Here’s how to calculate your debt ratio for each account:

account balance / current interest rate = debt to interest ratio

Here's a blog post that goes over the plan in more detail: New Hybrid Payoff Method: Debt-to-Interest Ratio

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