Deciding between the Snowball and Avalanche debt methods - Deepstash

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Snowball vs Avalanche: What's the best way to pay off debt?

Deciding between the Snowball and Avalanche debt methods

The supporters of the two methods are both enthusiastic about which one to use. However, it barely matters which system you use. The best approach is the one that keeps you motivated.

Make the minimum payments on all of your debt. Then, focus on one debt that bothers you the most and put every dollar you can towards it until it is gone. Then move on to the next debt.

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Regular monthly bills
Regular monthly bills

The bulk of your budget is made up of necessities like rent, phone and internet bills, insurance, etc. If you can lower your monthly expenses, you can save a lot for unplanned events.

  • Find a cheaper place to live.
  • Get a cheaper phone plan
  • Find a better insurance company
  • Grocery show once a week, so you don't waste food.
Debt when you're on a tight budget

There are a couple of paths you can take to pay off your high-interest debt when you're on a tight budget.

  • The snowball method. For those who need to see progress, pay off the lowest balance first. You'll feel inspired to keep going.
  • The avalanche method. Choose the debt with the highest interest rate to pay off first. This may require larger monthly payments and will take longer to see progress, but you will save the most money in the long run.
  • If you need to prioritize your credit score, focus on paying down your credit cards first. Paying the ones you are near to maxing out will improve your score quickly by a few points.
  • Set up payment plans, even if you can only afford a few dollars at a time. That way, your lenders can see you're paying something.
Incorporate unplanned entertainment in your budget

Financial professionals will advise you to cut out expensive nights out. In truth, you will have night's out, even when you're dirt poor.

To incorporate unplanned entertainment, set aside an amount each month. Be realistic. You can open another savings account for fun spending or you can use cash only.