Question 1

What is the debt snowball method?

Accepted Answer

The snowball method pays off debts from smallest to largest balance, regardless of interest rate. When one debt is paid off, that payment 'snowballs' to the next debt. This method provides quick psychological wins that keep you motivated.

Question 2

What is the debt avalanche method?

Accepted Answer

The avalanche method pays off debts from highest to lowest interest rate, regardless of balance. This mathematically minimizes total interest paid, potentially saving you more money than the snowball method.

Question 3

Which debt payoff strategy is better?

Accepted Answer

Mathematically, avalanche saves more money in interest. Psychologically, snowball provides faster wins that keep many people motivated. Choose avalanche if you're disciplined and want to minimize cost. Choose snowball if quick wins will keep you on track.

Question 4

How do extra payments help?

Accepted Answer

Extra payments go directly to principal on your targeted debt (smallest or highest-rate depending on strategy). This reduces interest charged and speeds up your payoff date. Even small extra payments can save significant money over time.

Question 5

Should I consolidate my debts instead?

Accepted Answer

Debt consolidation makes sense if you can get a lower overall interest rate and you'll actually pay it off (not just free up credit to spend more). This calculator helps you see if your current strategy could work without consolidation.