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Two ways of digging out of debt: the snowball and the avalanche

Consider a couple of ways of getting out of credit card debt.
Consider a couple of ways of getting out of credit card debt. AP

The start of a new year is an opportunity to reset and refocus on all the goals you missed out on last year. For many people, a great place to begin getting on track for the life you want means financial stability. Especially hot off the tails of the holiday season, now is a good time to consider how you’re going to tackle your debt in 2019.

A great first step is consolidating your debt to a singular loan at a lower interest rate, or transferring debt to a low-interest credit card. And from there, it’s time to start paying off your balances.

There are two popular methods for digging yourself out of any amount of debt, the debt snowball and the debt avalanche. If you’re lost on a place to start chipping away at your debt, one of these options could help you jump-start your journey to a debt-free life.

Debt snowball

This approach focuses solely on balances, not timeline or interest rates. Choose your smallest balance and pay the highest amount toward that one. One at a time, focus on the next smallest balance until it’s paid off and on and on until you have eliminated your small debts and can reallocate your debt budget to the biggest balances remaining. It begins small, like rolling a snowball.

Debt avalanche

Unlike the snowball, which is about balances, the avalanche method starts with the highest interest rate. Whichever loan has the highest interest rate, that one should be your focus until it is paid off, so it should get the majority of your debt budget. Once the highest interest is paid off, move on to the second highest interest and so on.

These methods work because targeting one loan above the others will help you see results and feel motivated that debt freedom is within reach. Make sure that while you’re focusing on one, you’re still making minimum payments required on the others.

Don’t let debt get you down. Remember, your debt is as unique as your financial journey, so before you commit to a specific approach to debt management, really assess your spending and saving. See what you’re able to do, how aggressively you can get out of debt and talk to an informed financial expert to see the best results for your finances.

Kat’s Money Corner is posted on Dollars & Sense every Tuesday. Kat Hnatyshyn, when not blogging or caring for her little ones, is a manager with CommunityAmerica Credit Union. For more financial chatter, visit