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Snowball or Avalanche? Choosing the Best Debt Repayment Strategy
There are two effective methods for tackling debt:
1. Snowball
Pay off the smallest balances first.
2. Avalanche
Pay off the highest interest balances first.
How It works
Snowball
- Make minimum monthly payments on all debts
- Put extra payments toward the smallest debt
- Once paid off, make payments on the next smallest debt
- Continue until debt-free
Avalanche
- Make minimum monthly payments on all debts
- Put extra payments toward the highest interest rate loan
- Once paid off, make payments on the next highest interest rate loan
- Continue until debt-free
Pros
Snowball
- Satisfying to pay off debt quickly
- Keeps you motivated
Avalanche
- Saves more interest long-term
Cons
Snowball
- Pay more in interest long-term
Avalanche
- Longer wait to see the first debt paid off
- Less motivating
Who It Works For
Snowball
- People who are motivated by seeing results quickly
Avalanche
- People who excel at meeting long-term goals without immediate results.
Start paying off your debt today. A financial professional can help you tackle your debt in alignment with your goals.
