A Debt Snowball And A Debt Avalanche - AL6400 Blog

A Debt Snowball And A Debt Avalanche

May 9th, 2013 by

So today I was reading various strategies that people use to pay off their debt. More specifically, the two methods that were in discussion was the debt snowball or debt avalanche method where one was more focused on the psychological aspect of encouraging people to pay off their bills and the other was to get rid of it as efficient as possible.

In a nutshell, for the debt snowball method you are supposed to organize all of the debt you have and your goal is to essentially pay off the smallest debt first. An example would be if you had two credit cards with an outstanding balance where you have to pay interest on it each month. You would then first pay the minimum payment on both cards so that you don’t incur interest. Afterwards, any money that you have left over should go towards paying off whichever card has the least amount of balance on it. After you are done with that you then continue on to the next debt. So as you can tell, this is supposed to give people the motivation to continue to paying off their debt.

For the debt avalanche method it would start off the same where you would first organize all of your debt and begin by paying the minimum on all of your current liabilities. However, the priority in terms of which bill you should pay off first is the one that generates the most interest debt. Mathematically, with this method you would be paying less interest fees and will ultimately be debt free faster.

This is where the debate begins as some say while one method makes more sense on paper, realistically more people are more likely to succeed with the other method as you get the sense of accomplishment faster by getting rid of small debt with the snowball method. With the avalanche method some were saying because you won’t be able to pay off a bill as fast that people will usually lose motivation to keep at it.

For myself if I was to choose I would use the avalanche method as it makes more sense. The funny thing to me is that I would say a big factor in paying off debt is the whole notion of even looking at the numbers in the first place. For example, I usually find people that spend too much are the same people that don’t even track their spending. If you were to take the first step with both of these examples I’m sure just looking at the debt and knowing where all your money is going to is the real factor that makes you want to be smarter with your money. Essentially, regardless of which way you choose you just have to do something in constantly keeping yourself informed about your finances.


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