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What’s the Difference Between Debt Avalanche vs. Debt Snowball Methods? 

Dealing with debt is no fun task. If you only make the minimum payment each month and don’t have a plan for accelerating payments, paying off your debt can feel like an impossible feat. Usually, to pay down large debts, you need to have a clear plan. The most common strategies for paying off outstanding balances are debt avalanche and snowball methods. While it can feel stressful and overwhelming to take charge of your debt, the sooner you get on top of the situation, the less you’ll owe in the long run.

If you are in over your head with debt, it may be helpful to meet with a debt settlement lawyer. A skilled attorney can examine your finances and determine the best strategy for dealing with your debt. Here is some important information to know about the difference between debt avalanche and debt snowball methods. 

What’s the Difference Between Debt Avalanche and Debt Snowball Methods?

Debt avalanche and snowball can be used as strategies for paying off most kinds of debt, such as student loans, auto loans, medical bills, and credit card balances. Mortgage payments are just about the only debts for which these methods don’t work. To start, both methods require listing your debts along with their minimum payments on all but one of them. The idea is that you will focus on the one you single out, making extra payments with the goal of paying it off first. Once that debt is paid off, you will start to target another outstanding balance. 

The main difference between these two methods is the debt you choose to single out first. The debt avalanche method involves focusing on the debt with the highest interest rate while the debt snowball method involves targeting the smallest debt first and working your way up. The method you should use will depend on your debt situation. Each method has various pros and cons that should be considered when determining which you should use. 

Using Debt Avalanche Strategies to Pay Off Debt

Debt avalanche involves making all the minimum payments on your outstanding debt, then using any remaining money to pay off the debt with the highest interest rate. Using this approach, debtors can save a lot of money on interest payments. By simply switching the order in which you pay off your debts, you can avoid hundreds or thousands of dollars in interest. Additionally, if you have a large amount of debt, this method can reduce the time it takes to pay off your debt by a couple of months.

In general, the debt avalanche method is the best approach for saving money and time. However, it does have drawbacks that should be considered. In order to use this method effectively, debtors must be disciplined with payments and allocating extra money into paying off a particular debt. If you can’t stay motivated or miss payments, this method won’t be effective. Additionally, using debt avalanche typically requires a certain, steady amount of income that can be used for paying off your debts.  

Using Debt Snowball Methods to Pay Off Debt

The debt snowball method involves focusing on the smallest debts and working your way up to the bigger ones. Using this approach, debtors can focus on their outstanding bills in ascending order. This strategy involves making extra payments on your smallest debt first while you make the minimum payment on all of your other debts. Once you pay off your smallest debt, you then target your next smallest balance. 

The debt snowball method can be effective for people who feel overwhelmed by their big debts, as it offers a more approachable strategy for dealing with outstanding balances. While using this method usually means paying more over time, it is often psychologically easier for people to deal with their debts by having some instant gratification and quick wins.

Because using this method means you’ll probably pay off your small debts relatively quickly, it can be a good method for people struggling to get over the hump of dealing with their finances. The one major drawback of this method is that you’ll typically pay more over time than if you use the debt avalanche method. 

Contact a Skilled Debt Settlement Lawyer at McCarthy Law

If you are struggling with debt and don’t know the best approach for tackling your payments, it can be helpful to meet with a skilled debt settlement lawyer. At McCarthy Law, our attorneys are dedicated to helping students navigate the complexities of the student loan system. Under our student loan debt settlement program, our licensed attorneys negotiate with creditors to reduce the principal balance of your credit cards, personal loans, and student loans. At the end of a successful negotiation, our clients pay only a fraction of their original loan balance. 

To schedule a consultation with one of our skilled student loan settlement attorneys, call (855) 976-5777 or fill out our online contact form.

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Jacob Hippensteel

Jacob Hippensteel focuses his practice on consumer protection and business litigation. Jacob regularly assists clients by ensuring that their rights as consumers are protected under Federal and State consumer protection laws. Jacob regularly advises clients on a wide variety of issues, as well as protecting those client’s interests in federal and state courts.