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  • Writer's pictureNicci Smith

4 Debt Payoff Strategies

I have become all too familiar with the plethora of debt payoff strategies presented by people who are actually good with their money. We've started our debt payoff journey numerous times throughout our married life only to slip and fall and somehow dig ourselves even deeper into debt. It's incredibly embarrassing, but even more so, it leaves us feeling so defeated every month. Add to that the current state of our economy, and we find ourselves feeling hopeless.

Without the right approach, paying off debts can be like trying to climb Mt. Everest: stressful and exhausting! But we shall fear not – there are different strategies available for tackling debt mountains, so we (and you!) don't have to go it alone with no plan at all. Let's take an in-depth look at several methods for effective payoff plans, so you can get on the path toward becoming completely debt-free in no time. So grab a cup of coffee (or two!) and let's dive into how we can tackle these debts together - step by step!

Debt SnowBall

Ahhh...the plan most often referred to as the Dave Ramsey Plan. This approach involves making the minimum payment on all your debts, paying off debts in order from the smallest to the largest amount owed. Once you pay off a debt, you roll that amount into the next debt - hence the debt snowball. The idea is that momentum will be gained and you'll be more apt to stick with the plan as you see the progress being made and debts being paid off. This is an ideal plan if you (like me) have a short attention span and need to see results in order to stick with something.


For example, let's say you have the following debts:

  • Capital One Credit Card, minimum due $29, total due $1,564

  • Target Credit Card, minimum due $29, total due $236

  • Car, minimum due $230, total due $10,452

  • Discover Card, minimum due $79, total due $2,354

  • Personal Loan, minimum due $135, total due $798

First, you would make all your minimum payments. Then, anything else you're able to budget for debt payoff would go towards the lowest balance - the Target credit card. Once the Target card is paid off, you would then move that minimum payment to the next lowest balance - the personal loan. Continue to make the minimum payments plus the snowballed amount until the personal loan is paid off. Once that debt is paid, snowball the minimum Target payment of $29 plus the loan payment of $135 into the next lowest balance - the Capital One Card. Repeat the process until all debts are paid. Make sense?

The Debt Snowball Method has been a popular way to pay off debt for many people. On the one hand, it is an effective way to pay off debt because it encourages small victories as you work your way down the list of smallest debts, which can be motivating and inspiring. Additionally, by focusing on one debt at a time, you can reduce the amount of interest paid in total and make significant progress in paying down debt. On the other hand, there are some drawbacks to this method. For example, if you have higher interest rate debts, those will remain unaddressed until all the lower interest rate debts are taken care of. This could mean substantially more money spent in the long run on interest payments. Furthermore, focusing on just one debt at a time may not give you access to larger amounts of cash flow since all your payments will be going toward one debt rather than spread out among multiple debts.

Debt Avalanche

The debt avalanche approach is similar to the snowball method in that you'll continue to make your minimum payments each month. However, instead of putting your leftover money towards the smallest debt, the debts are paid off in order from the highest to the lowest interest rate. This should ultimately save you more in terms of interest, but you may not be able to visualize your progress very well. You simply have to trust the process.


Honestly, depending on the number of debts you have to pay off (which is a lot for us), you may need a little more help figuring out your debt payoff plan using the debt avalanche. We used to help us determine if the Debt avalanche would be best for us. I highly encourage you to check it out if it's something that you'd like to look into.

Debt Consolidation Loans

There are lots of opinions about debt consolidation loans. They can be a great tool if used appropriately, but could also lead to more debt accumulation if you don't get your spending in check. On the plus side, debt consolidation loans can reduce your monthly payments as they often have lower interest rates than other types of debt. This can free up more money for day-to-day expenses and also help you keep better track of your payments, as you will only have one loan to manage. Additionally, by reducing your overall monthly payments, you may be able to pay off your debt faster.

On the downside, debt consolidation loans often require good credit or some form of collateral in order to get approved. This means that if you do not have a good credit score or any assets to secure the loan, it may be difficult to get approved. Additionally, while debt consolidation loans can reduce your monthly payments, they also extend how long it will take you to pay back the loan and could result in more total interest paid over time than if you had kept the original loans and debts separate.

Debt Management Plans/Debt Counseling

If you find yourself completely drowning in debt and unable to make minimum payments, it may be time to humble yourself and reach out to a debt counselor. A simple Google search will help you find one in your area. (But be careful!! Avoid any for-profit debt counselors. While nearly all debt counselors will charge a fee, it shouldn't be substantial.)

Debt Management plans work by consolidating your debt into one monthly payment - much like a consolidation loan - except you're not receiving a loan, and the debt management organization is making your payments for you. Debt Management organizations are often able to negotiate lower APRs and payments with creditors, helping you to feel more on top of your debt. This can be a helpful tool if you're struggling with a number of different creditors and are having a difficult time tracking payments.

As we’ve seen, there’s no one-size-fits-all approach to getting rid of debt. Whether you decide to snowball, avalanche, or use some other technique, the important thing is overcoming your debt and becoming debt free. It might not happen overnight but with patience and dedication, you can live a life of financial freedom. So find the payoff plan that works for you (and we'll find the one that works for us!) and get started on the path to being debt free. You’ll never regret taking control of your financial future – and if you need advice along the way, consider seeking help from qualified professionals (they're awesome!). So what are we waiting for? Get to it!

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