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Debt Reduction Methods and Philosophies: Snowball, Avalanche and More

This article was written by in Debt Reduction. 25 comments.


When someone who has accumulated debt across a number of credit cards embarks on the journey to rid himself or herself of this debt, and when that person is generating enough monthly income to cover all expenses and the minimum payments due on all cards with additional funds left over, there are two main philosophies describing the best way to achieve this goal. Although all approaches are good, there is no question where I stand on this issue.

I suggest following the path that affords the opportunity to get rid of debt as quickly and as cheaply as possible. This method has many names, but I’ve called it the Debt Avalanche in the past. The opposing viewpoint is the Debt Snowball, popularized by author and guru Dave Ramsey. This method suggests paying off debt in such a way that it might take more time and be more expensive but offers “quick wins” which help some people gain encouragement and momentum at the earliest stages of the process. And there are, of course, many points of view that present a compromise between these two extremes.

The snowball approach to debt reduction

By ordering your credit card debts from lowest balance to highest balance and paying the minimums to all except the first on the list each month, you will pay off your first debt sooner than by following any other method. If you need encouragement to continue your journey as you pay off debt, you can celebrate after your first credit card has a zero balance.

Not everyone requires this type of extra motivation for paying off debt. Additionally, even those who need extra motivation may not suffer by choosing a cheaper and quicker method of paying off debt. The “quick win” of paying off the first debt could come just as quickly by using the Debt Avalanche. But even if the first payoff doesn’t come as quickly, you can redefine your first milestone to allow yourself helpful celebrations as explained in the next section.

J.D. Roth from Get Rich Slowly has seen success with the Debt Snowball approach, as have many others. It is the most widely marketed philosophy.

For an illustration of the monthly process of sending minimum payments to all credit cards except the one on top, regardless of how the debts are ordered, see this visualization from No Credit Needed.

snowball3

One major problem I have with the above snowball approach is that your largest balance may be significantly more expensive than your smallest balance. Today it is not difficult to find a default interest rate on a credit card north of 30%. There is no way in good conscience I could recommend holding off on eliminating a debt this expensive in favor of paying off a small balance with a 7.9% interest rate. The same goes for payday loans, whose fees can border on usurious if interpreted as interest rates.

The avalanche approach to debt reduction

There is no question that anyone who follows this alternate approach to its conclusion will have emerged from debt sooner and by paying the least amount of interest possible. Some people argue that it is not as likely for someone to follow the Debt Avalanche through, but there are no data to support this. By ordering your credit card debts from the most expensive (highest interest rate) to the least expensive and paying the minimum each month to all cards except the first on the list, you reduce your interest payments quicker.

Since this is a mathematical approach, critics say it doesn’t take into account the emotions that come into play when dealing with money. It is true that emotions — your feelings about money — play an important role in financial decisions, and although this is a mathematical approach, how you feel about money still is represented in this method.

  • If you follow the Debt Avalanche method, you can feel good knowing that you’ve made a sound decision and will spend less money than others who take a different approach.
  • You can motivate yourself throughout by creating your own milestones for achievement, including paying off your first credit card, paying off $1,000 (or some other meaningful amount), or consistently reducing debt for six months (or some other meaningful time frame).
  • Your emotions may be the cause of your debt in the first place. While they obviously cannot be eliminated, learning to focus on the best mathematical approach for certain financial decisions can improve your overall relationship with money.
snowball4

Here I outlined the details of the Debt Avalanche. Trent from The Simple Dollar also likes the Debt Avalanche approach and Five Cent Nickel explains how Dave Ramsey is bad at math.

Other approaches to debt reduction

The hybrid approach. Somewhere between a snowball and an avalanche lives this hybrid. The concept here is simple. Order the credit cards from highest interest rate to lowest, like the Debt Avalanche, but move the card with the lowest balance to the top. This will provide a “quick win” if necessary but could still save significant money and time when compared to the Debt Snowball approach.

Pay the most annoying debts off first. This approach plays directly into the human psyche. The urge to eliminate a persistent itch is strong enough to motivate anyone to scratch, just ask any kid with chicken pox. Stephanie from Poorer Than You is a fan of this approach. This works well when you include debts other than credit cards. If you have a personal loan from a family member, I usually suggest paying that debt off the quickest while paying minimums to your credit card to help retain good will within close relationships.

Baker from Man vs. Debt says the same thing slightly differently: Pay off the debt with the highest emotional impact first. The argument here is simple. For some people the debts with the highest emotional impact are simply the debts with the highest interest rate, while others have a different psychological composition requiring alternate focus. You can’t go wrong by this approach which if continued will help you feel better quicker.

So what is the “right” answer?

It is easy to say, “Do what works for you,” and allow the debtor to come to his or her own conclusions. This can be a dangerous approach as it invites people to skip the consideration of all the options. Many people I’ve talked to who have successfully eliminated debt by using the Debt Snowball method not only found themselves back in debt after some time but did not realize that they could have saved hundreds of dollars and been out of debt sooner just by ranking their credit cards in a different order. They simply followed a guru’s advice without any critical thinking. Not only did they not learn to approach money from a more stable viewpoint but they paid extra money in the form of credit card interest for this “feature.”

Would they have succeeded if they were simply presented the idea that they could save money on their debt reduction journey by following a more mathematical approach? It’s certainly possible.

There is no approach that does not have some sort of merit. Getting out of debt in any way possible is better than not getting out of debt at all. All that I ask is that the details, including the total cost and time differences, are fully explained before a method is prescribed for someone else.

Here’s a calculator that will help inform anyone in debt about the timing and bottom-line differences between the various approaches to eliminating debt. In some cases, the cost of one method over the others will be striking.

An informed decision is the best type of decision. With a full understanding of the differences and is familiar with their own psychological tendencies, someone with debt can make an intelligent choice that is right for the individual or family.

Photos: House of Sims, Joe Shlabotnik

Published or updated May 21, 2012. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 25 comments… read them below or add one }

avatar Kelly

You might also want to include FrugalDad’s method for Recession-Proofing your Debt Snowball.
He recommends you save up $1,000 + the balance on the next debt and then pay it off, that way if you have any emergencies or a job loss that really add up you’re set.

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avatar troy

None of these approaches are absolute. But there is one universal way that is 100% always correct.

Focus on RISK.

Pay off the RISKIEST debt first.

I never hear this on the mountains of blogs and PF arenas. I see the focus on balance, or interest rate, or emotions or something else seemingly obscure.

You could also rank debts on monthly payment size, alphabetical order, due dates, age of debt, literally countless ways that all seem to work in some way or another.

But risk is the best way. Mathematics works most of the time, but there are always caveats.

You say use the optimum mathematical approach “except” if there is a nagging family member, or “except” this. You also assume that the payee will have the ability to continue with payments in the future based on current circumstances.

That does not accout for risk. The riskiest debt? Likely a debt that if not paid would cause greater harm than simply paying more interest. Say the IRS. Or a Tax lein on property. Or a loan to someone who could harm you in some way, ie spread rumors and harm your reputation, make life difficult, get you fired, etc. OR maybe a debt that stresses you out, keep you up at night, causes anxiety and rifts between your spouse. Causes you to not focus on you kids, because you are always worried.

Life is lived not on paper or in theory, but in reality. Risk takes into accout that reality every time. There are no caveats. If you have an IRS debt that if not paid can result in you losing property, or wage garnishment, or even loss of freedom, then math really doesn’t come into play.

Likewise, if you have a debt with an upcoming adjustment, or even the possibility of an interest rate adjustment, that risk must be considered.

I would pay off the loans that pose the most risk in declining order. If they all have an equal amount of litle risk, then I would focus on the method that will most likely produce results. If that method is mathematical, fine. If it is emotional, fine. But it takes some time, some thinking, and some introspection. Paying off debt requires understanding WHY you are doing it. Considering risk forces that WHY upfront, and makes it crystal clear. It exposes the issues, the problems, and the solution automatically

But most people don’t have debts with equal risk. Some loans are fixed. Some are variable or adjustable. Some debts are on appreciating assets, some on depreciating. Some on no assets. Some can be cleared in bankruptcy, some can’t. Some prevent you from selling your home or refinancing. Some can get you arrested.

So list your debts. Then take risk into account. Is the rate fixed. Can it adjust up or down. What is the likelyhood of that happening. Who is the creditor. Can that creditor come after other assets if you don’t pay. Can they inform your employer, garnish your wages, etc. Do they visit you on holidays. Are you related. Do you do other business with them and have other assets they could tap into.

Everyone has intentions. Intentions don’t matter, actions do.

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avatar Luke Landes ♦127,435 (Platinum)

Troy: You make excellent points about the *risk* of each debt. My point of view is based on credit cards, where risk is often fairly even, but add loans, particularly different types of loans, into the mix and things can get quite complicated. I may have to come up with a new article that takes a broader view. Thanks for sharing your input.

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avatar d

Flexo,

I agree completely that people can save money using the avalanche rather than the snowball approach.

Main problem: We’re talking about people who spent themselves into tens of thousands of dollars of debt by using the instant gratification philosophy-much like the toddler’s “I want it now.” Not exactly a sound financial mindset.

The genius of the snowball method is that it takes Americans’ “I want it now” philosophy and contorts it into “I want progress now.” As with a diet and exercise program, most people who don’t see significant results in the short-term will abandon the plan altogether, so the baby steps work by eliminating one chunk of debt every few months. But you still have to be disciplined to get out of debt and stay out of debt.

The genius of the avalanche method is that the debtor will most likely eliminate all debt more quickly, and save considerable money-as you said. But you still have to be disciplined to get out of debt and stay out of debt.

The avalanche method works for the financially savvy, the snowball works for the other 99% of Americans who aren’t very savvy and need psychological boosts. Either way, human nature dictates that a great many of the users of either method will end up in debt again. Getting advice from a guru or a blogger is great, but it isn’t easy to stay out of debt-especially in a consumer-driven economy (interesting that the name of your blog precisely hints to the bad spending habits of our nation’s citizenry-you no doubt did that on purpose.) And if history has shown us anything, it is that people will choose the easy route over the hard the vast majority of the time. Put another way: whichever method of debt elimination is chosen, most people don’t know what to do after the goal is reached; and furthermore they have no significant psychological boosts to keep them out of debt. Therefore, the old spending habits return (the same spending habits that put said people into tens of thousands of dollars of debt) and consumers get their psychological needs met through that spending.

Take a look at the easiest (and stupidest) route to getting out of debt-the lottery:

“88% of lottery winners still participate in the lottery every week. (creatures of bad habits)
2% have stopped playing altogether. (the very few actually stumble upon the fact that playing the lottery probably wasn’t a good idea in the first place and don’t want to throw more money away)”
**Source: Nettime (parentheses are my observations)
http://amsterdam.nettime.org/Lists-Archives/nettime-l-9912/msg00037.html

Moral: we are a society of consumption. The majority of the society will continue to consume until their financial resources have run dry. Then, they’ll turn to credit to keep consuming. Yes, I’m being pessimistic, but also realistic.

U.S. Data (Bureau of Economic Analysis)
2009 Q1 Disposable Personal Income = $10.78 trillion (DPI is Personal Income less tax)
2009 Q1 Personal outlays (i.e. consumption, interest,etc.) = $10.31 trillion (95.6% of DPI)
2009 Q1 Personal saving = $475.5 billion (4.4% of DPI)

With many saving 15% or more (and those doing so typically earning far more than the average personal income, a great many Americans are saving less than 4.4% and some even spending more than 100% of their DPI.) Sad, but true. Neither the debt avalanche nor the debt snowball nor the other listed debt reduction strategies can change this-it has to be a change in the societal mindset from consumerism to: eating first, then saving, then spending (you know-like our grandparents’ used to do.) Change usually only comes when the pain of staying the same exceeds the pain of changing. Politicians are always making decisions (at their constituents’ behest) that ease the pain of staying the same, thus keeping society from reaching that tipping point to cause change, thus further creating the two class society of those who have money and those who have debt.

I probably got pretty far off the topic of your post, but I’d say I’m well under the umbrella of commenting on consumerism.

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avatar Luke Landes ♦127,435 (Platinum)

There is a lot to respond to here, but I will point out that I really like your observation that after paying off the debt, completion of an immovable goal, some people just don’t know what to do. Some go back into debt, particularly if they were coddled by a philosophy that didn’t teach them a better way of relating with money during the process. There should be some kind of follow up, or at least, redefining the goal to be something beyond debt reduction, such that the journey does not end when the debt balances are zero.

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avatar AJC @ 7million7years

Great point, Flexo! That’s why I created a new method, called the Cash Cascade, which is designed to increase your net worth, not just pay off consumer debt.

We are all familiar with the concept of ‘good debt’ and ‘bad debt’, but most don’t realize that this is only a way of avoiding getting INTO (bad) debt … once we have acquired the debt, then we need to start thinking of debt simply as ‘cheap debt’ or ‘expensive debt’. The Debt Avalanche is clearly ideally suited to attacking the ‘expensive debt’ first.

However, there is another part to this: our ultimate financial goal is usually not to become ‘debt free’ (although, that may be a tactic that some would choose … not me!), rather to achieve financial independence, or wealth, or [insert your life-supporting goal, here], and often a part of the strategy will be to acquire SOME debt in order to get there while you are still young enough to enjoy life e.g. you might decide to take out a mortgage on an investment property, or a margin loan on stocks, or a small business start-up loan, etc.

Clearly, it would make NO sense to delay investing just so that you can pay off relatively cheap debt (e.g. student loan, mortgage, etc.) i.e. just to take out more expensive debt later (e.g. the small business loan) … instead, leave the cheaper loan in place and “pay off’ the more expensive loan by not taking it out in the first place!

Once you think about debt and investment as ‘cheap’ v ‘expensive’, it becomes easier to apply the principles of the Debt Avalanche to both debts AND investments :)

http://7million7years.com/2008/12/09/the-cash-cascade-tm/

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avatar kitty

Disclaimer: I’ve never had consumer debt, so this is the prospective of someone who doesn’t subscribe to “instance gratification” philosophy.

Here is another way – this would only work if you have access to good 0% offers — it’s not a way I invented, I read it from a post of a blogger who has done arbitrage on a grand scale. But I think had I found myself in debt for whatever reason, this would be the way I’d try to do it:
1. Get a 0% credit card and transfer all high interest debt there. There could be a 3% transfer fee, but it is likely to be a whole lot less than what you are paying in interest. Open a higher yield savings account.
2. Pay the minimum on 0% credit card (preferably via auto-pay so that you are never late) and make your additional payments to this savings account instead. Don’t touch this savings account for any reason, think about this money as belonging to someone else.
3. A month or so before 0% period expires (or if you get a bill that shows that for some reason your interest went up), take all the money from this saving account and send a check to this card. If there is still balance, find another 0% card and repeat.

This will only work if you have access to 0% cards and if you are disciplined enough not to touch this money.

As to the rest – as someone with a math background I cringe at the idea of wasting any money on interest which is what paying off the card with the lowest balance is.
I would also like to second 7million7years in that keeping fixed low interest debt around instead of repaying could be a valid investment strategy. One thing to keep in mind always is the possibility of future inflation and/or higher interest rates – a reasonable expectation nowadays. Even if all the government’s printing of money doesn’t cause high inflation, the government is bound to raise rates at some point. Long term rates are likely to go up regardless of government action as the appetite for the US government bonds vanes. If your debt is at 4.5% now, it may seem like higher than you can get on a normal CD. But what about 5 years from now? During the early 80s where you could get double digit returns on normal bank CDs people who 30-year fixed mortgages at 9% were feeling very lucky… Long term fixed low interest debt is as much a hedge against inflation as buying commodities or TIPs. In fact I have a couple of multi-millionaire friends who took a mortgage on their vacation home when they could’ve paid for it in cash.

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avatar AJC @ 7million7years

“Long term fixed low interest debt is as much a hedge against inflation as buying commodities or TIPs.”

Brilliant! :)

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avatar Stephanie

I used to believe the avalanche method until I considered the monthly interest I’m paying. So someone please help me with this one. To me, paying off the debt with the highest interest rate makes sense, but that’s assuming that all the debts have the same amount borrowed. If I have high interest rate but a low amount borrowed, shouldn’t I pay off the highest amount until the monthly interest rate accumulating is lower?

(these are student loans, hence the lower interest rate)
5.35% $3000
6% $2000

So to me, even though it makes perfect logic to tackle the 6% one, but then I realize that interest is accumulating on the 5.35% one faster because it’s higher. So I’m inclined to pay off the 5.35% loan until interest accumulates at the same rate as the 6% loan. Am I missing something or is this the right approach?

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avatar Luke Landes ♦127,435 (Platinum)

The interest rate *is* the rate at which interest accumulates on your balance. It always makes mathematical sense to focus on the highest-rate debt (after minimum payments on all debts are taken care of each month). Even if the balance of a higher rate debt is smaller, you’ll save more by paying that debt off faster, assuming you’re motivated to keep it up.

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avatar Stephanie

Thanks Flexo for your response, I really appreciate it.

For the 5.35% loan, it accumulates $160 a year in interest, while the 6% loan accumulates $120. So for a second I had considered paying the 5.35% loan down until its interest rate reached $120 a year ($120/5.35%=approx $2200) and then pay off the 6% loan before relooking at the 5.35% loan. So it’s more complicated, but you’re saying that despite accumulating more interest, I should do the obvious and pay off the highest interest rate?

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avatar Luke Landes ♦127,435 (Platinum)

Loans may play by some different rules than credit cards. It depends on how the interest is amortized. If the interest is calculated at the beginning of the loan, paying down a loan faster does not reduce the amount of interest paid. But many loans calculate interest on remaining balance, not initial balance. Assume you have a $100,000 loan with a rate of 12%. If you pay $50,000 in the first month, month loans will only charge you interest on the remaining $50,000 in the second month, but if the interest is already included or amortized in the loan, you may find that the amount of interest you pay doesn’t change regardless of how much you pay. In most cases, paying the minimum due to all your debt plus any extra to the highest interest rate until that one is paid off is the cheapest and quickest way to eliminate your debt, but when you have a loan where you can’t control the amount of interest you owe by paying it off faster, then the calculation is more complicated.

The bottom line is that if you have the opportunity to pay off your debt aggressively, do it, and prioritize the debt in a way that makes the most sense to you. (Sometimes a personal loan can be more important to eliminate early, even if it has a lower interest rate than a credit card.)

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avatar Apex

Stephanie,

You are confusing the total interest with the interest on each unit of money borrowed.

Think about it this way:

The 5.35% interest rate loan on $3000 is accumulating $160.50 per year for the entire balance. But you can think about it in units of say $1000 each. So it is accumulating $53.50 per $1000 per year. Which is $4.46 per month per $1000.

The 6.00% interest rate loan on $2000 is accumulating $120 per year for the entire balance. But you can think about that in units of $1000 each as well. It is accumulating $60.00 per $1000 per year. Which is $5.00 per month per $1000.

Now given that presume you have $1000 per month to put towards debt service. Where should you put it? The one that costs $4.46 per month per $1000 or the one that costs $5.00 per month per $1000? Which ever one you put it towards, that is how much less interest you will pay that month.

To see it in action consider the following comparison of paying the two loans down.

Option 1, Pay down largest loan first.
Month 1 – $1000 to 5.35% loan, remaining interest = 2*$4.46 + 2*$5.00 = $18.92
Month 2 – $1000 to 5.35% loan, remaining interest = 1*$4.46 + 2*$5.00 = $14.46
Month 3 – $1000 to 5.35% loan, remaining interest = 0*$4.46 + 2*$5.00 = $10.00
Month 4 – $1000 to 6.00% loan, remaining interest = 0*$4.46 + 1*$5.00 = $5.00
Month 5 – $1000 to 6.00% loan, remaining interest = 0*$4.46 + 0*$5.00 = $0.00
Total Interest paid = $48.38

Option 2, Pay down highest interest first.

Month 1 – $1000 to 6.00% loan, remaining interest = 3*$4.46 + 1*$5.00 = $18.38
Month 2 – $1000 to 6.00% loan, remaining interest = 3*$4.46 + 0*$5.00 = $13.38
Month 3 – $1000 to 5.35% loan, remaining interest = 2*$4.46 + 0*$5.00 = $8.92
Month 4 – $1000 to 5.35% loan, remaining interest = 1*$4.46 + 0*$5.00 = $4.46
Month 5 – $1000 to 5.35% loan, remaining interest = 0*$4.46 + 0*$5.00 = $0.00
Total Interest paid = $45.14

You will notice that not only is the total lower but the amount of interest owed each month is lower as well. It is better from the very first month and is better every single month after that.

Mathematically it is always best to pay down the highest interest loan first. I am not going to argue with any of the other points in this article or in the comments. There are many reasons to choose one payment method over another.

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avatar Stephanie

Thanks! I’ll give this all more thought. In the meantime, I’ll continue to tackle the highest interest rate one, which also has the highest amount, before re-looking at those 2. At the end of the day, the difference in interest rate is pretty small, so I’ll just keep plowing ahead. Thanks again for your help :)

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avatar The Happy Rock

I have always been a snowball guy or even Man Vs. Debt’s tsunami. Anecdotally, I see people have the most success with the snowball and the have the most trouble sticking with the avalanche. Again this is anecdotal, size of debts, personality, culture and a host of other factors play big parts.

I know the snowball(and the surrounding community) was a big part of y over the top enthusiasm and drive to get debt free.

My real life observations tend to see people get distracted by life when following the avalanche. When life places new demands on your money, it is easier to take on new debt or make other ‘bad’ decisions when you next milestone is 18 months away. The reality isn’t close enough, or you haven’t reinforced new behavior enough to make wiser decisions. When a major emotional milestone is weeks away it spurs focus and behavior change.

The debate will rage despite my opinion, but that is because this stuff is personal not strictly math.

Side note: I have an online debt calculator that I designed for this exact purpose. The goal is to help people visual how the changes in debts, payments, and interest effect their freedom date. It is a bit rough around the edges, so any feedback/enhancements is welcomed. The goal is to help people get excited to find faster ways to get out of debt.

http://www.debtfreehq.com/tools/debt-reduction-snowball-calculator.html

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avatar jim

I definitely agree that mathematically it makes more sense to pay off the high interest loans first. But I also agree that psychologically it makes good sense to pay off the small balance debts to give your self some quick progress. Theres pros and cons to each tactic. Which is better for an individual likely depends on how much they need the psychological benefit of seeing progress.

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avatar Jenn

“Doing what works for you” simply cannot be a decisive debt payment strategy. That’s how many people got into debt in the first place! Coming up with a debt strategy that works for your personal finances is something different. Maybe trying each strategy for 3 months at a type to see what works best is also worth a shot. Great article.

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avatar Carl Lassegue

Great Article! I would tend to lean towards the avalanche method simply because I’m a mathematical person and it just seems to make sense for me.

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avatar Shaun Somers

In my experience as a financial coach most people with a significant amount of consumer debt already have their debt pretty much ordered in terms of interest rate. With the popularity of lines of credit (and their low interest rates) the majority of people might charge on credit cards but then consolidate over to the LOC. As a result the debt snowball is both the emotionally powerful and mathematically correct choice in many cases.

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avatar Buck

I was a Certified Consumer Credit Counselor for 3.5 years and counseled thousands of people about their debt. A couple things that experience taught me:

1. People have a lot of emotions tied up in their relationship with money; and
2. To pay down debt effectively, people need to understand that relationship and how it is going to impact any debt repayment strategy they use.

Some people are very analytical and are motivated by paying down the debt with the highest interest. Others feel very intimidated by their debt or their creditors. When I counseled people I usually just came out and asked them which debt it was going to feel best to pay down first.

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avatar Cejay ♦1,521 (Half-Dollar)

I am a fan of the debt snowball. WHile I know it may not be the smartest way to go it is the method that worked for us. We needed that incentive of paying debts off quickly. And it has been two years and we did not go back into debt except to buy a car when mine pretty much conked out. The car is almost paid off at this time.

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avatar Melissa

We have used the snowball for the last 7 months and have knocked out two of our three credit card balances. Now we have one more credit card and 4 student loans. I was going to continue with the snowball, but I seriously can’t wait to get out of debt as quickly as possible, so it may be time to move to the avalanche.

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avatar Michael

I have a car loan and house loan whose combined monthly obligations are well below my present means so I pay extra on the house loan because its rate is highest. But, I’m gambling, taking a chance and hoping everything goes alright. I’m ignoring the wisdom of reducing monthly obligations – which I could do much faster if I devoted principal payments to the car loan instead.

A 12 month or 6 month living expense emergency fund is a lot smaller when you eliminate a monthly obligation. An unemployment check is a lot bigger too. A pay cut not as painful. There be more than emotions to a snowball approach. There is math too!

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avatar moneystepper

I like the consideration of hybrids and other options. However, for me, avalanche is always the winner. I hope the example given in my article explains why I think this:

http://moneystepper.com/debt-repayment-avalanche-snowball/

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avatar Fehmeen

I personally vote for the debt avalanche method because I’m anti-interest rates to begin with. Emotions should be sidelined when it come to finance (I agree, poor emotionally biased judgements are often the cause of debt in the first place, so why not set them aside and motivate yourself by actually being debt free?) and there’s no point in paying off debt with lower balances when the interest amounts rate on large debt balances could be increasing by the same amount each month you don’t pay off those loans.

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