Pay off your debt fast
Best way to pay off your debt fast – one of the most common questions asked, and one we can try and help you answer.
Paying off debt can sometimes seem like an uphill battle, especially when you’re doing it without a strategy. Thankfully, there are several methods you can use to pay off your debt in a smarter, more structured way. These methods can, when used correctly, help you to pay off debt faster and give you that wonderful debt-free feeling sooner. In this article, we’ll explain two of the most common debt repayment methods: the snowball and the avalanche.
What is the debt snowball method?
The debt snowball approach to debt repayment is all about paying off your smallest balance first, then moving onto the next largest, and so on – just like a snowball growing in size. This method ignores the interest rates charged on the debts and instead focuses solely on the outstanding amounts. One of the great things about snowballing debt is that you pay off entire debts sooner by starting with smaller ones. This can give you a real boost mentally and help motivate you to pay off the rest.
What is the debt avalanche method?
The debt avalanche method, though named similarly, is almost the inverse of the debt snowball. Rather than paying off in order of outstanding totals, you instead focus on the interest you’re paying on each of your debts. So, for example, if you’re paying 17.9% on your smallest debt, but 23.9% on your largest, you’d start paying off your largest debt first simply due to the higher interest rate. The downside to this approach is that you won’t actually be paying off any individual debt for a long time, which can be psychologically demotivating.
Which is best for you?
Of course, everyone’s circumstances are different and there’s no way to say that one method is the best choice for all people. That said, part of the problem with debt can be psychological, so any improvements in this area are welcome. With the debt snowball method, you’ll be paying off and closing the accounts for smaller debts first, giving you a real sense of progress in a shorter time. Of course, in an ideal world, you wouldn’t have multiple debt balances to worry about – which is why debt consolidation loans can be so useful. This way, you’ll have just one single debt with one single payment to make, making snowballs and avalanches something you can leave on the mountain!