Debt Snowball vs Debt Avalanche - How to Pay Off Debt!
Channel: AJ Mobile Money
Date: 2019-04-05

There are many methods to pay off debt, but two of the most popular methods are the Debt Snowball and the Debt Avalanche. The Debt Snowball is what most people know about, as it was made popular by Dave Ramsey. The Debt Avalanche however, is the most efficient way to pay off your debts. So which method is better? We will explore in this video, Debt Snowball vs Debt Avalanche!

Definitions:

Debt Snowball is a method to payoff debt, in which you order all debts in order from smallest to largest debt. For all debts you will make the minimum payment, and with any left over cash you have, you put it ALL towards the payment of the smaller debt.

With the Debt Avalanche, you also pay the minimum payments for all debts, but instead of ordering by size of debt, you order based on the highest interest rate to the lowest interest rate. Any additional left over cash you have goes to paying the debt with the highest interest rate. If you have debts with the same interest rate, the higher debt balance goes first 

Both methods allow you to put a lot of focus on one particular debt. Psychologically, the Debt Snowball is better as it allows you to payoff smaller debts faster, thus reducing the number of individual debts you have sooner. Mathematically, the Debt Avalanche is better as it allows you to pay the least amount of interest, thus a smaller total debt payment over time. 

The Debt Snowball method is better for those who need the satisfaction of seeing the number of debts reduce faster, allowing them to celebrate the quick wins over what could be a long time period. This can help with their motivation to keep going.

However if you're more analytical, and don't need the Psychological wins, the Debt Avalanche is the better option financially and time wise.

Be sure to place your vote in the poll to show which method you think is best for you! The Psychology of money is very interesting, as behavior and impulse drive our actions in most cases.


Checkout My Gear!
     https://teespring.com/stores/aj-mobile-money

Investment Referral Bonus Links:
     M1 Finance ($10 Bonus using this link): 
     https://mbsy.co/rv3mc

     We Bull Trading App: Free Stock valued between $3-$1,000
     https://act.webull.com/i/bIZyWqeQAWjx

     Robinhood (1 Free Share of Stock): 
     http://share.robinhood.com/akeemw 

     SoFi Money (Checking/Savings Account): sofi.com/share/money/2263374 $50 Bonus!
     SoFi Invest (Brokerage Account): sofi.com/share/invest/2263374 $25 Bonus!
     SoFi Loans (Personal Loans): sofi.com/share/2263374 $100 Bonus!

     Coinbase:
     https://www.coinbase.com/join/5938d5de692ae800ac85c44f?src=android-link


Follow me on Social Media:

    Website: https://ajmobilemoney.com/ 

     Instagram: https://www.instagram.com/ajmobilemoney/ 

     Facebook: https://www.facebook.com/AJMobileMoney/

     Twitter: https://twitter.com/AJ_Mobile_Money

#AJMobileMoney #PersonalFinance #MultipleStreamsOfIncome