Snowball or Avalanche?

Janny9872

Thoughts on which method you think is best for paying debt off.
Snowball method or Avalanche method? 

Tia 

moving_forward

All depends how your brain works. I like avalanche as am a spreadsheet junkie and like to calculate the interest saved. Some prefer snowball as you get "wins"s quicker. 

rdchick

My debts are all similar amounts with similar hideous interest rates so personally it didn't really matter what I paid off first but I've now got some 0% interest BT deals with cards I already have so I've moved money around to pay the minimal amount of interest as possible. But does definitely depend on how you like to monitor your wins!

GZA1981

It really depends on how your brain works but getting some 'quick wins' can help psychologically. It feels like you're making progress early on which can help if your debt free journey is likely to be a long one.

I started by clearing smaller balances first and then moved on to bigger interest rates or larger monthly repayments.

As long as you've started by listing every single debt it's interest rate and monthly payment you can start planning.

Good luck!

Brie

snowball I understand.  what's an avalanche?  (in a money/debt and not snow sense)

GZA1981

Brie said:

snowball I understand.  what's an avalanche?  (in a money/debt and not snow sense)

Focusing on the biggest interest rate first regardless of the balance, throwing everything available at clearing that first and just making the minimum payments on the rest. Once that's paid moving on to the next highest interest rate and doing the same.

Brie

Ah!  I always thought that was snowballing!  

anna42hmr

Brie said:

Ah!  I always thought that was snowballing!  

snowballing is listing all the debts in order of amount, smallest amount to largest, pay minimums off everything but the smallest, clear smallest debt and then move to the next smallest and so on

i.e if have debts of £500, £900, £1000, £3000, £5000. they get cleared in that order regardless of the interest rate.  

Basically the biggest debt is tackled last, but all the smaller ones are cleared by that point and you snowball up all the payments making on the smaller ones up to this one. 

I did it this way as pschologically for me it worked better as can see wins quicker and knocking out debts one at a time