Snowball vs. Avalanche

Debt, Debt, and more Debt....oh my!!!! If you're like me, just the thought of tackling debt is somewhat overwhelming, especially if you're looking at debt as a "big picture" instead of viewing each debt as an individual entity. Debt can include credit cards, medical bills, personal loans, student loans - anything with a balance.


Over the past year, I've researched several methods to pay off debt more efficiently. I'm very much a "checklist" type of girl. (Meaning, I love to create lists and check items off my list.) This gives me a visual sense of accomplishment!!


With my research, I found the two most common methods are the Avalanche method and the Snowball method.


My favorite and most useful is the SNOWBALL METHOD. This strategy has allowed my family to pay off THREE credit cards in less than 2 months - while still maintaining our regular household expenses.


With this process, you make EXTRA payments toward your smallest balance first, while only paying the minimum required payments on other debts.


When that debt is paid in full, you move to the next smallest and repeat until you've paid down your total debt.


The biggest advantage of the snowball method is that it gives you a sense of accomplishment as you see one debt disappearing one by one. YOU CAN ACTUALLY SEE YOUR GROWTH!!

In comparison, the AVALANCHE METHOD is a little more technical and requires a bit more research on your part. When using this method, you write down all debts from highest interest rate to lowest. (YES, you guessed it - you will need to know all interest rates for your debt)


Once you've gathered all of your information, you will start making EXTRA payments on the debt with the highest interest rate first, while paying the minimum required payments on all other debts.


This method will save you more money in the end because you're knocking off the highest interest rates first.


Personally, I did not like this method because I didn't visually see any progress. I knew debt was being paid, however, I still had the same number of credit cards. (again, I'm a "checklist" type of girl, haha)


Rather you use the Snowball or Avalanche method - both are way more effective for paying down debt than just paying your minimum payments each month. Also, you can easily use both methods at the same time. Decide which works best for your family - and CRUSH YOUR DEBT one payment at a time!!


Click here to download my debt payment spreadsheet.





REFERENCES: Dave Ramsey


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