As winter comes to Ohio State, students are nestled in their homes protected from the snowfall. During this quiet time while we are surrounded by snow, students will find it is the perfect time to start attacking their debt! If you think debt and snow have no relationship, then maybe you have never heard of the snowball or avalanche method! Both are fantastic ways of attacking those student loans, car loans, or balances on your credit cards.
The snowball method works by the paying off your smallest debts regardless of any of the balances interest rates first before prioritizing the debts with the larger balances. To be more precise, you should arrange your debts from smallest to largest, make the minimum payments on each of the balances besides the smallest, and pay as much on your smallest debt as possible. Repeat the process until each debt is paid in full. The advantages of the snowball method are it allows you to modify your behavior and you can visibly see the progress of paying off your debts because you started with the most attainable balance!
The avalanche method, on the other hand, is a way of paying off debt by having you pay off the balance with the highest interest rate first. Like the snowball method, you will make minimum payments on all your balances, however any extra cash will be put towards the balance with the highest interest rate. You will continue to the debt with the next highest interest rate until all the debt has been paid off. The advantages of the avalanche method are that, compared to all the of the rest of the repayment methods, it allows you to save the most money by attacking the most expensive debt first!
So, although the cold and snow brought on by winter might not be your favorite season, it gives you a great opportunity to start addressing your debt and the earlier you pay it off, the better!