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I don't want a snowball, I want an AVALANCHE!
Soooo, over on Money Saving Mom Crystal posted a link to this article about using the Debt Avalanche to pay off your debts. I was originally going to use the Debt Snowball method taught by Dave Ramsey and others. If you don't have a clue what I'm talking about, quick explanation here. Debt Snowballing is where you start by paying any extra money you have on your account with the lowest balance, when that account is paid off you apply the payment from that to the one with the next highest, essentially snowballing your money until everything's paid off. Ok, now in this article it talks about the most efficient way mathematically to pay off things is to start with the account with the highest interest rate. You apply all your extra money on that account and pay just the minimums on the others. When that account is paid off you apply that amount to the next highest interest rate account and so on......Now, the reasoning behind the Debt Snowballing method is that you'll pay off the lowest balance account quicker which will motivate you to continue on to the next one....but with the Debt Avalanche method you'll get out of quicker and save alot more money overall...Has anyone out there done either of these methods, did it work for you, and do you have any thoughts on the other method???We've got some serious debt to pay off, not sure if I'll share figures here (for now I'm not) and I'm looking to get out of debt ASAP!!!What are your thoughts???Blessings,
1 comment:
We were doing kinda mixture of both of these for a while. I made my list of what was what and decided which I wanted to tackle first. Then just move those payments onto the next, etc (it's exciting to get something DONE). It was working good - and we've adjusted it based on my career change.
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