Which is to say, the speaker has acknowledged that the accounting shenanigans used to get this bill passed in the teeth of statutory spending constraints are basically bullsh**. But thereâs a lot of bullsh** going around Washington just now.
So then I tried the âlittle debtsâ approach. You knowâ¦ Pay off the smallest debt, then take the payment you were making on that and put it against the next debt. Thatâs often called the debt snowball, and the idea behind it is that seeing that âwinâ early is supposed to motivate you.
The debt avalanche method differs from the debt snowball method because rather than focusing on the smallest balance, it focuses on the highest interest rate. Imagine an avalanche, which starts at the highest peak and cascades downward. Similarly, the debt avalanche method requires you pay down the highest interest rate loan first while paying the minimum balance on the rest of your loans. So if you have loans at 7.9%, 6.8% and 4.5%, you would work on eliminating your 7.9% interest rate loan first first, regardless of the balance. Once youâve paid it off, youâll then focus on the 6.8% loan, then the 4.5% loan. I employed the debt avalanche method to pay off my student loans. For me, given my interest rates and student loans balances, it just made sense. Here are the pros and cons of using the debt avalanche method. Pros: You save money on interest (win)! Youâll pay off your loans faster. Cons: It can be hard to sustain motivation. It may feel like it takes forever to pay off the high-interest debt. Debt snowball or debt avalanche: which one is best? Both the debt snowball and debt avalanche methods will get you to the same destination â a debt-free life. Choosing the right strategy for you really depends on your goals and how youâre motivated.