Snowball vs. Avalanche: What’s the Best Way to Pay Off Debt?

couple doing their accounting

You’ve got some creditors to pay, and maybe even some tax debt, and that can be tough. The last thing you want is for the IRS to seize your assets with a tax levy. Learning the best way to pay off debt puts you in the driver’s seat and help you protect your financial future. In general, there are two ways people pay off large amounts of debt, and they’re known as the snowball and avalanche methods.

The Snowball Approach to Paying Off Debt

It’s like a snowball because it starts small and gets bigger, just like a snowball rolling down a hill. You start with small payments and build momentum over time. Start with the smallest balance and move on from there. You stay in good standing with all loans, so you might have to make interest payments, but focus remains on the smallest balance until it’s eliminated. Benefits include:

  • Paying small payments first shows results quickly and provides a sense of accomplishment.
  • You free up funds for larger balances as you eliminate smaller ones.
  • Starting with the smallest balance and working up can make an insurmountable amount of debt seem manageable.

However, drawbacks include:

  • Usually taking longer to pay off your debt than when using the avalanche method.
  • Paying more in interest over time.

The Avalanche Approach to Debt Repayment

Instead of focusing on the smallest balance, you focus on the highest interest rate. Like an avalanche, you start at the highest peak and cascade downward. Again, you need to remain in good standing across the board, still paying the minimum on the rest of your loans.The benefits include:

  • Saving a significant amount on interest over the repayment schedule.
  • Paying off your loans faster.

That said, drawbacks include:

  • Trouble motivating yourself to sustain good debt payments each month.
  • Feeling like it takes forever to pay off that initial high-interest debt.

Consolidate your Debt with a Loan From Xpress Cash

Here at Xpress Cash, we can help you manage your debt by offering consolidation loans. Contact us today to find out more, or feel free to visit one of our branches in Michigan, Wisconsin, and Idaho.