If you are currently trying to tackle your student loan debt, you are probably wanting to figure out which method of debt repayment you can use that will allow you to pay your student loans off as quickly as possible. With the increasing costs of higher education, and thus higher amounts of student loans being taken out, it is common for people to feel like they are drowning in student loan debt and will never pay it off. But there are ways you can tackle and overcome even massive amounts of student loan debt – and two popular methods of repayment include the debt snowball method and the debt avalanche method. Here we will take a look at each of these methods and discuss which one is best for student loans.

What Is The Debt Snowball Method?


The debt snowball method focuses on paying the minimum monthly payment on each of your debts and then devoting any extra money that is remaining in your budget to whichever debt has the lowest balance. Once you have completely paid off the debt with the lowest balance, you continue to use the money that was being contributed to that payment and add it in to the payment of the debt with the next lowest balance. This method of debt repayment was made popular by Dave Ramsey. The idea behind this method of debt repayment is that you are able to achieve small wins from the beginning as you pay off each debt with the lowest balance and helps you feel more comfortable with a higher payment towards your largest debt once you reach it because you have already grown used to budgeting that money for your smaller debts. By having small wins early on and being able to commit to larger payments on your highest debt towards the end, you are able to stay motivated until you completely pay off all debts. However, the biggest problem with this method of tackling debt is that it ignores the fact that you will pay much more overall in the long run because of paying more interest.

What Is The Debt Avalanche Method?


The debt avalanche method is similar to the debt snowball method, except it does account for the amount of interest you will need to pay. Just as with the snowball method, you begin by paying the minimum payment on each of your debts. However, instead of applying any leftover money to the debt with the lowest balance, you apply the leftover money to the debt with the highest interest rate and work down towards the debt with the lowest interest rate. In most circumstances, using the debt avalanche method usually means saving money overall because you are paying down the larger amounts of interest sooner, which means you will pay less in interest all together.

Which one is better?


Because we have already discussed that the debt avalanche method typically saves money in the long run because you pay off the debts with the higher interest rates sooner, you probably would assume this is the better method to use when tackling debt. However, the answer to this question is not as simple as it seems. A number of social research studies have been conducted on the matter and have found that people are more likely to actually stick with their payoff plans and finish paying off their debts if they begin with the debts with the smallest balances. Truly determining which debt repayment method is best for you varies based on your own circumstances and preferences. It is important to remember that becoming debt free requires more than choosing a payoff method, it also requires having a budget and sticking to it, refinancing debts to the lowest possible interest rates you can, and in many cases lifestyle changes designed to prioritize paying off your debts.

If you are having difficulty determining the best method to tackle your own student loan debt, contact The Student Loan Advisory Group at 813-675-9755 today. Our student loan specialists have the knowledge and skills necessary to educate and empower our clients with the tools and information they need to solve their most challenging financial problems caused by federal student loan debt.