Being in debt is never easy, but if you’re doing the work to pay your debt off, then all the more power to you! If you come up with a thorough debt repayment plan, that can help you stay on top of your payments and hopefully be debt-free after a specific period of time.
Two great methods of paying off debt are the snowball and avalanche methods. Both these methods include having one debt be your focus debt and paying the minimum payments on all the remaining debts.
You pay off as much as possible on your focus debt until it is completely paid off, and the next debt becomes your new focus debt. Let’s take a closer look at what both methods entail, and then you can decide which of these methods might be good for you:
The Snowball Method of Paying Off Debt
With the snowball method of paying off debt, you basically start by paying off your smallest debt balance and moving towards the larger debts. This is done regardless of the interest rates on these debts.
The reasoning behind this method is to get all of the little debts you have out of the way first so that you can focus on just a handful of major debts later on. For example, if you have some doctor’s bills and a few credit card payments you make, those would be your focus debts, and you would pay them off first.
These debts can usually be paid off quickly, and when your total number of debts decreases, you can start to see progress and feel more on top of things. In the end, you’ll be left with one or two major debts and a lot more confidence to take them on.
The Avalanche Method of Paying Off Debt
The avalanche method of paying off debt involves paying debts with the highest interest rates first and then moving on to those with lower interest rates. This method makes a lot more sense when it comes down to the numbers and allows you to pay less in interest over time.
The debts with the highest interest rates become your focus debts, and you work to pay those off first. Once that is done, you are left with debts that have a very low or no interest rate.
Both of these methods can work great to help you pay off your debts. At the end of the day, it doesn’t even really matter which method you go with because both of them will help you reach your end goal – which is to be completely debt-free. So, as long as you stay motivated and keep making your payments, you are on the right path!
