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Snowball vs Avalanche methods – here’s what you need to know
Are you currently paying off multiple types of debt at once, making you feel lost and overwhelmed? You’re not alone. Bankrate states that Americans are $16.5 trillion in debt, the highest it’s ever been.
The snowball and avalanche methods are the two most popular ways to pay off debt. This ensures that your debt becomes manageable by prioritizing certain debts over others and makes it psychologically rewarding to pay off your debts.
Snowball Method
The snowball method involves paying off your smallest debts first, regardless of the interest rate.
Once the smallest debt is paid off, you move on to the next smallest debt, and so on. The advantage of this method is that it can be psychologically rewarding, as you can see progress being made quickly by paying off smaller debts. This can provide motivation to continue working towards paying off all debts.
The reason why this method is so popular is that you don’t have to worry about interest rates, just the flat amount of the debt cost. This is the simplest way to start paying off your debt.
Avalanche Method
The avalanche method, on the other hand, involves paying off debts with the highest interest rate first, regardless of the size of the debt.
The advantage of this method is that it can save the person money in the long run, as high-interest debts can be particularly costly. By paying off the highest-interest debt first, the person can reduce the amount of interest they pay overall.
The reason why this method is popular is that it allows you to save on interest over the lifetime of your debt. This may be a bit trickier and more complex than the snowball method, but this is our recommendation if you are able to come up with a plan.
So Which is Better?
Both the snowball and avalanche methods have their pros and cons. Which approach is best for a particular person will depend on their individual financial situation and goals.
Some people may find the psychological boost of the snowball method helpful, while others may prefer the more financially sound approach of the avalanche method. No matter which one you pick, be sure to create a plan and stick to it.
Hot Tip: Although these are 2 of the most popular methods, find a method that works for your situation! Do research online and contribute to debt when you can.
What if I Can’t Afford To?
If you are having a hard time committing to saving money for your debt, there are many companies that can help.
GreenWise is a debt relief company that helps Americans that are struggling with debt. All you need to do is input the debt amount you need help with, your name, phone number, and email to get a quote.
We recommend checking it out if your debt seems unmanageable with your current income.
Bottom Line
Paying off debt can be a long and challenging process, but with the right approach and determination, it’s possible to eliminate debt.
We recommend that you stick to one of these methods and start planning to put a percentage of your income towards debt monthly. If you are having a hard time doing so, check out GreenWise, and take that step towards becoming debt free.
