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Which Debt Repayment Method Is the Best for You?

In today’s debt crisis, the average American has around $38,000 in debt, excluding mortgages. Debt comes in all forms. From consumer credit cards debt to student loans, more people than ever before are seeing first hand the dangerous effects that come from racking up debt so quickly. 

With the amount of debt continuing to rise, many people looking to begin their journey to debt free lives simply don’t know where to start! There are a variety of different methods of repayment out there and it’s important to note that everyone’s situation is different. If you’re working to figure out the best way to tackle your own debt, these methods could work for you! 

Debt Stacking 

This method of debt repayment begins with analyzing all of your debts and sorting them by interest rate. You’ll then start paying off your account with the highest interest rate first. Regardless of the amount you owe for that account, you’ll want to work on paying that one off completely first. 

During this time, most people make the minimum payments across all their accounts and then put any extra money they have to pay off their highest interest account first. 


Pros of Stacking: 

You’ll save money! By paying those high interest loans off first, you’ll save money in the long run!

Cons of Stacking: 

If you have a credit card with $4,000 at a 18% interest rate and a personal loan of $700 at a 5% interest rate, even though you’ll be saving money, it will take you significantly more time to pay off the credit card. It may feel easier to wipe out small debts first and there is indeed satisfaction in that. However, if you’re looking to save the most money possible, paying off your highest interest debts first and leaving the 5% interest loan until later is definitely the move for you! 

Debt Snowballing

Unlike the first method, debt snowballing focusses on paying off the smallest accounts first regardless of interest rate. Followers of the Snowball method are encouraged to list all of their accounts and then focus on tackling the smaller ones first!

Pros of Snowballing: 

With this method, many people find themselves becoming highly motivated by seeing their overall accounts go down over time! 

Cons of Snowballing: 

As one might imagine, if you’re paying your smallest accounts first without regard for interest rates, you may end up paying back a bit more money than you have to. 

Things to Remember Throughout Your Debt Free Journey


  1. The “Marathon, not a sprint” mentality


“Rome wasn’t built in a day.” “Good things come to those who wait.” “It’s a Marathon, not a sprint.” Whatever saying you like to use, remember that the journey to becoming debt free doesn’t happen overnight. You’re putting in the work, don’t get discouraged if you don’t see immediate results! 


      2. Allow yourself small rewards


Putting everything you have into paying off your debts is obviously a good thing, but it can get exhausting. It’s important to reward your efforts every once in a while. As long as the splurging doesn’t become a habit! 


      3. You don’t have to do it alone


While some people look to pay off joint debts with their partner or family members, many people pay off debts that are solely their own. This doesn’t mean that they can’t reach out to friends and family for moral support! Having someone to keep you motivated and accountable can significantly increase your chances of success throughout your debt free journey! 

Which method is right for you? 

So, out of the two most popular debt repayment methods, which one is right for you? The answer to that question really lies within your own personal mindset. You can always try one and switch to the other if you find that you’re not making much progress. 

In the end, the simple fact that you’re looking to pay off your debt is an achievement in it’s own right! Work to stay motivated and a debt free lifestyle is just around the corner!

Written By: Gaib Bunch


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