Facing down multiple debts can feel absolutely overwhelming.
But how do you decide which approach is right for your unique situation?
This makes the most mathematical sense, as you’ll save the most money on interest charges over time.
Make the minimum payments on all your debts.
Put any extra money you have towards the debt with the highest interest rate.
Repeat until all debts are paid off.
Knocking those out first can make a big dent in the total amount you owe.
Put any extra money you have towards the debt with the smallest balance.
This can be incredibly powerful, especially if you have a lot of smaller debts that feel overwhelming.
Paying them off in quick succession can give you the momentum to keep tackling the larger debts.
This involves taking out a new loan with a lower interest rate to pay off multiple debts at once.
This can simplify your payments and save you money on interest.
The debt management plan.
This involves working with acredit counseling agencyto negotiate with your creditors for lower interest rates and payments.
They handle the payments for you.
you might also combine elements of the avalanche and snowball methods.
There are a few key factors to consider.
But if you have a few large debts of similar size, the avalanche may be the better choice.
If that sounds like you, the snowball method could be a great fit.
Others may find the avalanche method’s logical, math-based approach more compelling.
Ultimately, the best debt payoff strategy is the one you’ll actually stick to.
Whichever approach you take,being proactive about paying down your debtsis the crucial first step.
