When you have debt-- student loans, credit cards, car loan, etc-- it can be hard to figure out how to get started repaying it. Do you throw an equal amount of money at everything? What if one debt is SO much bigger than another- should you focus on that and ignore the others?  

 

There are a few ways that you can choose to attack your debt. Keep reading and I'll tell you about them! ;)

 

BUT FIRST... (let me take a selfie)

 

After talking about pizza last Friday, I wanted to update you guys on a new discovery: pizza on bagels is officially the BEST IDEA EVER. It isn't the cheapest method of making homemade pizza, but definitely one the most delicious.

 

These babies were like big Bagel Bites- and we all know how delicious THOSE are, right?

 

Okay. So back to debt repayment. (PS thanks, Megan, for inspiring this post!! :) )

 

Disclaimer: I am not recommending any one particular method for you- it all depends on your situation and preferences. I just want to make you aware of the options available to you!

 

Snowball Method

- List your debts in order of balance: smallest to largest (we're focusing on amount owed, not interest rate)

- Pay minimums on all debts- EXCEPT smallest-balance debt. Throw all remaining money towards the smallest-balance debt until it's paid off.

- Now set your sights on your new smallest-balance debt (which was originally #2). Pay minimums on all other debts, EXCEPT the new smallest-balance debt. Throw all remaining money towards that debt until it's paid off.

- Continue rolling payments over and attacking the smallest-balance debt until they're all paid off! (Your "extra" payments will gradually grow in size, like a snowball! Get it?! )

- Many people like the snowball method because it’s motivational. Once you get that one smallest debt paid off, you’re like “HOLY COW! I paid off a debt!” and then you get psyched to keep going.

 

Avalanche Method

- List your debts in order of interest rate: largest to smallest (in this case, we're focusing on JUST interest rate, not amount owed)

- Pay minimums on all debts EXCEPT largest-interest-rate debt. Throw all your remaining money towards the largest-interest-rate debt until it's paid off.

- Now set your sights on the new largest-interest-rate debt (which was originally #2). Pay minimums on all other debts, EXCEPT the new largest-interest-rate debt. Throw all remaining money towards that debt until it's paid off.

- Continue rolling payments over and attacking largest-interest-rate-debt until it's paid off.

- This will most likely save you money in the long run, since you’re eliminating the highest interest rates first.

- BUT- it is not as motivational as the Snowball method. If your highest interest rate debt is HUGE, it’s going to take you a long time to pay it off, and you'll have to be self-motivated enough to keep at it, even without the quick-wins of paying off little debts that the snowball method would give you!

 

Your Choice!

Perhaps some of your debts are more painful than others. Maybe you borrowed money from family or friends and want to pay that back first. That's totally fine! If you want to attack one debt first, then do that. Just be sure you're paying minimums on all the others!

 

Aren't these methods all basically the same?

Yup, they are all pretty similar. The Avalanche method will probably save you some interest payments in the long run, but overall, they're all going to get you out of debt eventually!

 

So... which method should I use for my debt?

I can’t tell you which method is best. It depends on your personal preferences and goals! If you know that you have a hard time sticking to monthly payments, the Snowball method might be best to keep you motivated. But if you only care about paying the least amount of interest possible, then perhaps the Avalanche is your best bet.

I wouldn't recommend sitting around and putting too much thought into this decision. This is one of those decisions that you can totally draaaaaag out just to avoid actually starting to PAY your debts. Just pick a method and start paying 'em off-- that's really all that matters!

 

 

 

How do you (or would you) attack your debt?

I'm pretty numbers oriented, so I think I'd go with Avalanche just because I know it would probably mean the least cost to me overall. But, on the other hand, I think I would really like the Snowball, too, because seeing things get paid off would keep me motivated!