How to Pay Off Your Debt: Snowball vs. Avalanche
Feeling buried under debt can be stressful, but creating a clear plan can make it much more manageable. Whether you have credit cards, student loans, or a car loan, knowing your total debt and choosing the right payoff strategy can help you regain control of your finances. Two popular approaches — the snowball method and the avalanche method — offer different paths to becoming debt-free. In this article, we’ll break down how each works.
💠Step 1: Identify Your Current Debt
Start by writing down every debt you owe, including:
- Creditor name (e.g., credit card, car loan, student loan, etc.)
- Balance owed
- Interest rate (APR)
- Minimum monthly payment
Once you have that list, you can calculate your total debt and use it to decide which payoff strategy works best.
💪 Step 2: Choose Your Payoff Method
There are two main strategies people use to pay off debt effectively:
1. Snowball Method
- How it works: Pay off your smallest debt first while making minimum payments on the others.
- Why it helps: You get quick wins and motivation as you see debts disappear faster.
- Best for: People who need momentum and motivation to stay consistent.
2. Avalanche Method
- How it works: Pay off the debt with the highest interest rate first while making minimum payments on the others.
- Why it helps: You save more money in the long run because you pay less in interest.
- Best for: People who want the most mathematically efficient route.
Whichever method you choose, Advancial is here to help! Track your progress by setting up savings goals with our Goal Setter option in cuAnywhere® — it’s simple and keeps you organized. Advancial also offers a range of financial calculators in our Knowledge Center to help guide you in making the best choices for your future.
