Question 1

What is the difference between debt snowball and avalanche methods?

Accepted Answer

The snowball method pays off debts from smallest to largest balance, providing quick wins for motivation. The avalanche method pays off debts by highest interest rate first, saving the most money mathematically. Both work - choose based on your personality.

Question 2

How do I decide which debt payoff strategy to use?

Accepted Answer

If you need motivation and quick wins, use the snowball method. If you want to minimize interest paid and can stay motivated without seeing fast progress, use the avalanche method. The best strategy is the one you will stick with.

Question 3

Should I save money or pay off debt first?

Accepted Answer

Start with a small emergency fund ($1,000-2,000) to avoid new debt, then focus on high-interest debt (above 7%). Once high-interest debt is paid, balance debt payoff with retirement savings, especially if you have an employer match.

Question 4

Is debt consolidation a good idea?

Accepted Answer

Debt consolidation can be helpful if you can get a lower interest rate and it simplifies your payments. However, it only works if you stop accumulating new debt. Be wary of fees and longer terms that might increase total interest paid.

Debt Snowball vs Avalanche Calculator

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Debt Payoff Strategies Explained

Frequently Asked Questions

What is the difference between debt snowball and avalanche methods?

How do I decide which debt payoff strategy to use?

Should I save money or pay off debt first?

Is debt consolidation a good idea?

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