Understanding the avalanche and snowball methods.

Now that you’ve crunched the numbers on your total credit card debt (we discussed this in detail in Chapter 1), it’s time to pick the method that will help you pay it down.

There are two main approaches to consider: snowball and avalanche. Each has its own benefits, and your persona8l financial goals will help you decide which to choose.

The snowball method is a simple approach to paying off debt. You begin by paying off your smallest debt amount as fast as you can. Once that debt is paid off, you take any extra funds and put them toward the next smallest debt. As you keep going, the amount you pay each time will get bigger—like a snowball rolling down a hill packing on more snow. This method will help you pay off your debts faster and seeing quick and consistent progress will motivate you to keep going.

The avalanche method pays off debt with the highest interest rate first. Like the snowball method, once that debt is cleared, the funds previously used are redirected to the debt with the next highest interest rate. This process continues until all debts are paid in full. By focusing on the costliest debts in terms of interest rates, you will save a significant amount of money over time.

Which method is the best for you? Take our Debt Payoff Method quiz below to help find the debt repayment strategy that best suits you.

With the avalanche method, you might save more money overall, but you should keep in mind that it could take longer to see real progress, potentially making you feel discouraged. With the snowball method, you will pay off smaller debts quickly, which can be satisfying, but it may cost more with the additional interest charges.

Once you have determined your method, list all of your debts in the order that you plan to pay them off – either highest interest to lowest (avalanche) or smallest to largest balance (snowball).

Ready to take the next step with help from Everwise?

Simplify your debt through a debt consolidation loan.

Could streamlining your debt be a smart choice? When you consolidate multiple debts into one loan with a lower interest rate, this may help you pay down what you owe faster (typically a personal unsecured loan or if you own a home a home equity loan ).