Have debt? The snowball method vs. avalanche method

Samantha Belanger - Nov 30, 2021

My opinion? The snowball method may give you that dopamine and financial reward feeling quicker. By tackling the small amount, it may give you the motivation to keep on to the next goal making each debt feel like you’re coming at it with a vengeance! Read below, what do you think?

The snowball method is simple, begin by listing your debts from smallest to largest. Ensure you make minimum payments on all your debts of course- except the smallest that debt you pay as much as you can afford. What happens next?

Repeat until each debt is paid in full!

The idea is that you gain momentum with each payment. As you watch the smallest debt decrease and finally get paid off not only encourages you it motivates you to tackle the next debt. The money you put towards paying down the first goal is there for you to pay off the bigger debt and so on.

  • Step 1: List your debts from smallest to largest regardless of interest rate.
  • Step 2: Make minimum payments on all your debts except the smallest.

  • Step 3: Pay as much as possible on your smallest debt.
  • Step 4: Repeat until each debt is paid in full.
     

The Avalanche method (also simple in nature) is a strategy to organize your debt from highest interest rate to lowest. Make sure you continue to make minimum payments on all your debts. The debt with the highest interest rate pays as much as you can afford until it is paid off. Then repeat until all debts are paid in full.

  • Step 1: List your debts from smallest to largest interest rate.
  • Step 2: Make minimum payments on all your debts except the one with the highest interest rate.
  • Step 3: Pay as much as possible on the debt with the highest interest rate.
  • Step 4: Repeat until each debt is paid in full.
     

My opinion? The snowball method may give you that dopamine and financial reward feeling quicker. By tackling the small amount it will give you that motivation to keep on to the next goal making each debt feel like you’re coming at it with a vengeance.

If you want to talk about these methods, contact me today.