Paying Down your Debt, which method do you use?

Published on Author Manny Larcher
Snowball vs. Avalanche Method
Student Loan Refinancing at Your Speed


Taking the “next step in life” puts a lot more on your plate. You’re; getting a new car, upgrading your home, having a baby, and of course you still have student loans… and it’s costing real money. Having a good line of credit can go a long way to ease those tensions. But what about those monthly payments, can I refinance?

When looking to manage your debt, you’ll be familiarized with the benefits of the snowball versus those of the avalanche method. The two methods have the same goal: to pay the minimum on all accounts while throwing whatever extra money you can at a target account. The theory is that some people enjoy a sense of accomplishment while paying off small debts and some enjoy the prospect of long-term savings. Whatever the case, we all know that no two people are the same.


The snowball method would like to see the number of open accounts dwindle.

The snowball method aims to boost borrower confidence by suggesting paying more than the minimum on their smallest balances. The borrower sees their open accounts and the number of those accounts continue to go down, each time, the remaining debt seems (is) more manageable. As those smaller balances get paid off, funds are freed up to make payments on remaining balances. It can take longer to pay off your debt, and you can end up paying more in interest over time, but for some people this method works.


The avalanche method would like to see you pay the lowest interest possible.

The avalanche method of debt management prioritizes those accounts which have the highest interest rate, saving the borrower months of payment and sometimes thousands of dollars. This is definitely the aggressive approach, so this method is better if you’re more motivated. If you’re discouraged easily by more daunting debts, focus on what keeps you motivated and pay off that student loan and other debt.


Some want to mix it up.

While you’re free to pick one, you’re also free to do BOTH. Start with the Avalanche approach for six months or so, if you start to get annoyed by nagging balances switch to the snowball method. The goal is to lower those balances, and then get back to knocking out that high interest rates. The only thing is to make sure you keep up on all of your minimum payments. Refinancing can make that a lot easier to do!

One thing to keep in mind is the rates given by the government are fixed, but they’re not necessarily the lowest rates you could have. They don’t offer to refinance those loans and many graduates with steady jobs and good credit don’t get rates as low as they could from private lenders. It’s worth the time to look at refinancing those student loans. More manageable payments mean less stress and more time and money to live the life you want!

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