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Snowball and Avalanche Methods For Paying Off Debt


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    I've heard of one of these methods before, and was curious to hear if anyone else has done this. Paying off debt can be very tricky and slow. I know because I was there very recently. Apparently there are two distinct methods people have come up with to pay off debt. The first one is the snowball method and the second is the avalanche method. I haven't heard of the latter before. Both methods require you to list out your debts and make minimum payments on all but one debt. The avalanche method has you paying extra money toward the debt with the highest interest rate. While the snowball method has you paying down the smallest debt first and working your way up without an emphasis on what debt has the highest interest rate.

    KEY TAKEAWAYS

    • The debt avalanche method involves making minimum payments on all debt, then using any remaining money to pay off the debt with the highest interest rate.
    • The debt snowball method involves making minimum payments on all debt, then paying off the smallest debts first to get them out of the way before moving on to bigger ones.
    • The debt avalanche method can often result in lower payments over time.
    • The debt snowball method can be valuable for maintaining energy and dedication while paying off debt.

    Has anyone else used these methods? Which is more effective in your opinion? Is there a better method than these out there?

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    BlankCheck Wrote:

    Has anyone else used these methods? Which is more effective in your opinion? Is there a better method than these out there?

    My brother has used the avalanche method to a successful degree. You just have to stay consistently on top of it, in my opinion. I've sort of used a mixture of both methods before, and it worked pretty well.

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    Avalanche makes the most sense to me. But its all about what your goals are.

    If you are looking to get bad accounts off your credit quickly, and to just simply lower of debt accounts for credit reasons, then I could see using snowball. It also feels better at first because you get to eliminate smaller accounts and be fully done with them, which can give you a feeling of momentum.

    But for me, and I think in most people's case, avalanche is the way to go. At the end of the day debt sucks because of all the interest it accrues. So focusing on eliminating the debt that accrues the most interest every month saves you money vs not, if you are resolute in getting rid of all debt. Wrote a blog on it if interested.

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    What about debt consolidation instead of keeping track of multiple cards? Many banks have cards just for that. If you have a good score, you can be approved for one of these cards. And most of the time, they're no interest for up to a year. But be sure to pay it off completely, otherwise you're get gouged by some pretty hefty APRS.