Snowballs and Avalanches

Are you familiar with snowballs and avalanches? 

It’s almost summer, and today I’m talking about two of the most effective strategies for paying off debt. Both of them work, but they approach the process differently. The debt snowball method focuses on momentum. You list your debts from smallest to largest according to their balance, regardless of the interest rate. You attack the smallest one aggressively while making minimum payments on all the others. Once the smallest debt is paid off, you roll that payment into the next smallest, and so on. The advantage of this method is motivation. Knocking off some debt quickly builds confidence and keeps you engaged in the process. It’s especially helpful if you’ve struggled with consistency in the past. 

The debt avalanche method focuses on math. List your debts from highest to lowest interest rate. Then, focus on paying off the highest interest first while making minimum payments on the rest. Eliminate the most expensive debt. Then apply that payment to the next one. The advantage of this method is efficiency. By tackling high-interest debt first, you reduce the amount of interest paid over time.

So which one is better for you? The snowball or the avalanche? If you need motivation and quick progress, the snowball method may be the best. If you’re disciplined and want to minimize interest costs, the avalanche method is more efficient. It’s also typically faster. The most important thing is staying consistent and committed until you’re completely debt-free.

Now, is your credit card debt too big to handle? Let Christian Credit Counselors help. They’ll create a debt management plan specifically for you. For more information, visit online at crown.org/ccc.