How To Destroy Debt: Debt Snowball or Debt Avalanche?

When you get to that point where you know it is time to do something with this mountain of debt, how do you want to go about it? Are you an avalanche or a snowball?

Do you want to roll down the mountain gaining momentum and increase your size as you go like a debt snowball or would you instead start out with a slow rumble then watch it collapse down the mountain in big chunks like a debt avalanche?

This is the Dave Ramsey way.  We list debts smallest to largest not paying any mind to the interest rate.  Then, you find the money to pay off that smallest debt AS FAST AS YOU CAN!

Debt Snowball

If you were going with the Debt Snowball technique, you would start with that Kohl’s charge card first (well, second – after cutting it up into teeny tiny pieces).  If the minimum payment on that is $30 a month, you would by now have been revamping your budget and have another $100 to throw on that – making it $130 a month.

This sense of accomplishment is what the Debt Snowball is all about.  Getting super excited about paying off debt gives you the courage to do things you previously may not have wanted to do.

Interest rates really chew on some people’s last nerve.  It really bothers them when they see that 24% interest rate on their Kohl’s card.  If they work on the greatest interest rate first, then think about the money they would save in the long run.  This might take you a lot longer than the snowball method.  Especially if your highest interest rate is attached to your most substantial debt.

Debt Avalanche

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