What is a Debt Snowball and Avalanche?
Everyone has a preference for how they like to pay off their debts. However, if you want to cover your expenses, tackle debt, and save money in the long run, you may be looking for the best strategy to accomplish that goal. While plenty of strategies exist, two popular methods are the debt snowball and avalanche strategies. But what exactly are they?
The debt snowball strategy is a method that involves paying off your smaller debts first before moving on to your larger expenses. Its purpose is to start small with your debt coverage while moving slowly toward your higher and more glaring costs. The best way to tackle the debt snowball is to repay your small debts and put some extra money toward your higher costs. If you follow that approach for a while, your significant costs will dwindle, helping you save money for the future.
Regarding the debt avalanche method, this strategy suggests you make minimum payments towards all your outstanding debts and use any extra cash to repay the expense with the highest interest rate. While it may take a long time to cover your debts through this strategy, you could end up out of debt paying less interest than you would with the snowball method.
If you’re considering using one of these strategies, you may wonder which method is better for you. The answer to your question isn’t straightforward, but you could compare each method’s pros and cons to decide which works best.
Keep reading to learn the difference between debt snowball vs. avalanche and see what works for you!
Debt Snowball Vs. Avalanche: What are the Pros and Cons?
Both methods, like everything else, have their advantages and disadvantages. For example, the debt snowball strategy can help you build motivation because you see quicker results. You don’t have to compare interest or Annual Percentage Rates because the snowball method focuses on your debts as a whole. However, a drawback of this strategy is that it does not lessen the amount you owe on overall interest as much as the avalanche strategy. It may take longer to be completely debt-free through the snowball strategy than you would using the avalanche method.
On the other hand, the avalanche strategy requires you to train yourself to put money toward a specific debt instead of a minimum amount. Covering your debts takes plenty of time, so the avalanche method won’t work if you lose motivation. Additionally, the avalanche method assumes you have constant money to pay your debts. So, if an unexpected expense emerges, it can suspend the repayment process.
Fortunately, you don’t have to stop using the avalanche method if an emergency arises. You can simply apply for a loan from LoanMart to cover that urgent expense! Just use a vehicle title in your name as collateral to obtain the funds you need. Speak with a title lender or loan servicer today for more information about this secured loan option.
Debt Snowball Vs. Avalanche: What Works Better for You?
Even if you read the pros and cons of both methods, you may still be unsure about what strategy to choose. Ultimately, the answer to your question depends on what method works for your preferences. Are you looking for a method to quickly pay off your debt? Then, the snowball method may be your solution! However, the avalanche strategy can work for you if you’re searching for a way to cover your debt while saving money.
If you think about it, there isn’t a huge difference between the snowball and avalanche method. Both options can help you pay off your debts, and either can work for what you want. There isn’t a rule against changing from one method to the other, so if you don’t like the avalanche method, for example, you can immediately switch to the snowball strategy. What’s important is that you stick with a plan that works for you.
Are you curious about other debt repayment methods? Speak with a financial advisor online or over the phone today! They may be able to supply you with different payment strategies that work closely with your preferences! Once you find a preferred method, you can use it to repay your expenses and live debt-free.
Also Read: Speed Up Your Debt Repayment With Debt-Snowball and Debt-Avalanche Methods
