Are You a Snowball or an Avalanche?

iStock_000014499505XSmallWhat is the best way to get out of debt? Well, that depends on who you talk to, but the experts and the experienced alike seem to narrow things down to two choices: the snowball method or the avalanche method.

There are pros and cons to both the snowball method and the avalanche method. Learn the ins and outs so you’ll know which is right for you.

Before paying down debt with either method, you should do two things: stop non-essential spending, and determine how much extra money you can put toward debt. If you are living paycheck to paycheck, this may mean finding ways of cutting your current expenses, selling items, or taking on a second job as you work toward your goal.

When you make a snowball in real life, you start with a little bit of snow and then continue to add to it until it gets larger and larger. Each bit of snow contributes to the whole, over time. Basically, you start out small and use the momentum to end up with big results.

The first thing to do with the snowball method is to list all of your debts, with the smallest debt at the top of the list. Continue to pay your monthly minimum balances on each of your debts, but apply any extra money toward the smallest debt until it is paid off. Once that smallest debt is eliminated, apply your extra toward which ever debt is now the smallest, along with the minimal monthly amount you would have paid for the debt you just eliminated. The amount of money you are applying will continue to grow until all of your debts are paid off.

Anyone who has ever seen an avalanche can testify that it starts out at the top and then works its way down to the bottom, picking up speed as it goes along. With the avalanche method, you will again list your debts, but this time you will focus on the debts that charge the highest interest. Note all of your debts, with the highest interest rates at the top, regardless of the amount owed.

Pay all of your minimal balances while applying your extra money first to the debt with the highest interest. When that is paid off, start on the next remaining debt with the highest interest, and so on, until all of your debt is eliminated.

So, which method appeals to you most? Are you a snowball or are you an avalanche? Both methods have their pros and cons, but if you practice the one you have the most affinity for, you will be more likely to stick with your goal of paying down your debt.

What do the experts say? There have been conflicting studies. Advocates of the avalanche method say that since you are attacking the highest interest first, you will save more money in the long run that you can then use to pay off your debt. However, studies have shown that people who use the snowball method are more likely to succeed in eliminating their debt.

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About Mary Ann Romans

Mary Ann Romans is a freelance writer, online content manager, wife and mother of three children. She lives in Pennsylvania in the middle of the woods but close enough to Target and Home Depot. The author of many magazine, newspaper and online articles, Mary Ann enjoys writing about almost any subject. "Writing gives me the opportunity to both learn interesting information, and to interact with wonderful people." Mary Ann has written more than 5,000 blogs for since she started back in December 2006. Contact her at maromans AT or visit her personal blog