If you juggle several debts, a clear repayment method helps you stay focused. Two of the most popular are the debt snowball and the debt avalanche.
The Debt Snowball
List your debts from smallest balance to largest. Pay the minimum on everything, then put every extra dollar toward the smallest debt. When it is cleared, roll that payment into the next one.
Pros: Quick wins keep you motivated. Cons: You may pay more interest overall.
The Debt Avalanche
List your debts from highest interest rate to lowest. Pay minimums on all, and send extra money to the highest-rate debt first.
Pros: Saves the most money on interest. Cons: It can take longer to see the first debt disappear.
Which Should You Choose?
If motivation is your biggest challenge, the snowball can help. If you are disciplined and want the lowest total cost, choose the avalanche. A hybrid approach also works: knock out one or two tiny balances first, then switch to highest interest.
Boost Your Progress
- Create a realistic budget and find extra cash
- Consider a balance transfer or consolidation loan if the math works
- Avoid adding new debt while paying down old balances
The best method is the one you will actually stick with.