Part 2- Day 10: Pay Off Your Debt
- November 10, 2018
- By: Greenpath Financial Wellness
You did it! Now that you understand your options for dealing with debt, it’s time to make a plan for being debt-free!
Two of the most popular methods for paying off your debt are the Snowball Method and the Avalance Method.
The Snowball Method means paying off your smallest debts first.
This creates a sense of motivation and accomplishment from being able to payoff smaller bills at a higher frequency. One negative aspect of this approach is that it will take you longer to pay off your largest debts—and those are often the ones that carry the highest interest, so you’ll likely end up paying more.
Using the Avalanche Method, you pay off your highest interest debts first.
High interest debts cost you the most money over time. This is the fastest way to eliminate debt and save on interest payments—however, it can take years to eliminate this debt while other smaller bills still trickle in. If you have a lot of high-interest debt, this is likely the best option for you.
Which option is best for you?
It comes down to the type of debt you have and what you feel most comfortable with. If you’re motivated by quicker victories and/or if you have a large number of individual debts that you feel overwhelmed by, the snowball method may be the right option for you.
If you have a lot of high-interest debt, and/or you want to pay the lowest amount of interest, you’re likely better off choosing the avalanche method.
Get Started on the path to being debt free today
If want to lower your interest rates while paying off your debt faster, contact GreenPath Financial Wellness. Take advantage of a free financial counseling session and see if a debt management plan could be right for you.
Stay tuned as we move into next week. We will focus on trimming expenses to become financially fitter.