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Drowning in Debt? Strategies to Regain Control
Putting more toward your payments, but still not moving the balance? High interest keeping you stuck? Here are a few things you can try to start seeing a difference in your debt payoff journey:
- Snowball Method
- Avalanche Method
- Debt Consolidation
- Debt Management Plan
Here, we’ll break down each payoff method, what it actually involves, and the pros and cons, so you can figure out what works best for you and your situation.
Snowball Method
The snowball method involves tackling your debt from the smallest to the largest balance. You keep making the minimum payments on all your debts, but focus on paying off the smallest one as fast as you can.
Once the first debt is paid off, the money you were allocating toward it is redirected to the next smallest debt. That means you pay the minimum on the next debt plus the extra money from the debt you just cleared. This makes your payments bigger and helps the next debt disappear faster.
Each time you clear a debt, you free up more money to tackle the next one, which gives you momentum and a real sense of progress. It is not just about numbers; it is about keeping yourself motivated as you go.
Pros
One of the biggest advantages of the snowball method is that paying off the smallest debts first gives you quick wins that keep you motivated. Each cleared debt frees up more money to put toward the next one, which accelerates your progress over time. It is also simple to understand and easy to follow, even if managing multiple debts feels overwhelming.
Cons
The main drawback is that it is less mathematically efficient than other methods, because you might pay more in interest by focusing on smaller debts instead of higher-interest debts. This method can cost more money over time if interest rates are high and not prioritized.
Avalanche Method
The debt avalanche method focuses on paying off your debts with the highest interest rates first. You continue making the minimum payments on all your debts, but you put any extra money you have toward the debt with the highest interest rate. Once that debt is fully paid, you move on and start putting that same extra money toward the next highest-interest debt on top of the minimum payment.
This method is designed to save you money over time because you are tackling the debts that cost you the most first. By focusing your extra payments on the highest-interest balances, you reduce the amount of interest that builds up and pay off your total debt faster.
Pros
One of the biggest benefits of the avalanche method is that it can save you a lot of money on interest. By focusing on the debts with the highest interest rates first, you reduce the total interest that builds up and can pay off your overall debt faster. This approach is great if you want a strategic, long-term plan that maximizes efficiency.
Cons
The main downside is that it can take a while to completely pay off your first debt, which can feel discouraging. Because you don’t get the quick wins that the snowball method offers, some people may find it harder to stay motivated in the early stages.
Debt Consolidation
Debt consolidation consists of combining multiple debts into a single loan. Basically, you take out one new loan, ideally with a lower interest rate, and use it to pay off your existing debts. Instead of juggling multiple payments and due dates, you only have to focus on one payment each month, which can make things feel a lot more manageable.
Pros
Making just one payment each month instead of several can make managing your debt much less stressful. If the new loan has a lower interest rate than your current debts, it can also help you save money and pay off your debt more quickly.
Cons
Not everyone will qualify for a low-interest consolidation loan because your credit score usually needs to be in good shape. Some loans also have fees, which can increase the overall cost of the loan. But most importantly, consolidation does not address your spending habits, and since your old debts are now combined into one loan, it’s important to avoid adding new debt on top of it.
Debt Management Plan
A debt management plan is a program offered by a credit counseling agency that helps you pay off multiple debts in a more organized way. Instead of managing several payments to different creditors, you make one monthly payment to the agency, which then distributes the money to your creditors. A counselor will also work with your creditors to try to lower interest rates or waive late fees, making it easier to pay off your debts faster.
Pros
A debt management plan helps to make your finances easier to manage. Instead of keeping track of multiple payments, you only have to make one monthly payment, which can take a lot of stress off your plate. Many plans also work to lower interest rates or remove late fees, which can help you pay off your debts faster and for less. A credit counselor will guide you through creating a budget and provide support to help you stay on track.
Cons
There are a few things to keep in mind before starting a debt management plan. These plans usually last three to five years, so it’s a long-term commitment. Agencies often charge a setup fee and a small monthly fee, which can add to the cost. Not all creditors participate, and if you miss payments, the plan could be canceled. You also can’t open new credit cards or take out new loans while on the plan, and some existing accounts may be closed. Even if accounts stay open, you usually can’t use them for new purchases.
Summary
| Method | Pros | Cons |
| Snowball | – Early milestones – Easy to stay motivated | – Less mathematically efficient – Can cost more in interest |
| Avalanche | – Saves money on interest – Faster payoff | – Can take longer to see progress – Can feel less encouraging |
| Debt Consolidation | – One monthly payment – Can lower interest and simplify payments | – Approval may depend on credit score – Doesn’t fix spending habits – Fees can apply |
| Debt Management Plan | – Can reduce interest – Simplifies payments – Professional guidance | – Can be a long process – Fees can apply – Accounts may be closed during the program |
No matter what debt payoff method you choose, changing your spending habits is key. Paying off debt isn’t just about strategies or plans; it’s about making sure you don’t take on new debt while chipping away at what you owe. Creating and sticking to a budget, tracking your expenses, and being mindful about purchases are essential steps to actually get ahead.
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