Forget about snowball or avalanche. There’s a better way.
Most of you have heard of the two standard methods of paying off credit card debt — Snowball and Avalanche. I’m going to suggest that you do neither, because there is a better way.
First, a brief introduction to both. The snowball method was popularized by Dave Ramsey, and it’s basically like this. Order your credit cards from smallest balance to largest, and then set a dollar amount of extra (like $50 or $100) that you’re going to pay over the minimum payment. If your minimum is $45 and your extra is $100, you would pay $145 per month on that card, and just the minimum payment on the rest. Once the smallest one is paid off, you move to the next smallest and take that same $145 and add it to the next highest’s minimum. If that’s $72, then you put $217 towards it.
Repeat this until all debts are paid off. This method is popular for two reasons. First, you get early wins by paying off the smaller debts faster. You also free up the cash that was going to a credit card and use an ever-increasing amount of money to tackle more debt.
Avalanche is like snowball, but you set up the order from highest interest rate to the lowest. If multiple cards have the same interest rate, then just order those by balance. Then you take the same principle of a setting an extra amount and then you use the same payment methodology as snowball (extra + minimum, pay off, repeat).
The benefit here is that by dealing with the higher interest rate debts first, you end up spending less money overall, assuming you keep it all up and don’t fail miserably.
Those are fine, but I prefer a different approach
Basically, you go berserker at your debt. Every time you get paid, throw as much money as you possibly can at your debt. Be brutal with yourself. Be ruthless to your refrigerator and your car’s gas tank.
Maybe I prefer a little bit of chaos instead of a rigid structure. I don’t need to know that I’ll have debts paid off in X months. I don’t care.
I want them paid off as soon as humanly possible.
How do you order your credit cards? Pick the one that gives you the most pain, and kill it first. It can be the one with the highest monthly payment. It can be the one with the stupidest purchase you’ve ever made. Does a particular balance keep you up at night? Whatever the reason, you’ve got to attack it and put it down.
Screw those banks that want years of sweet, sweet interest payments off of you. Nope! You’ve got life to live and money to spend on things that bring you joy.
If your food budget is $700/month, learn how to cook a few dishes from scratch and cut that down to $450. Then pause one or two of your nine streaming subscriptions. Then drive as little as possible. Don’t eat out. Sell things on Craigslist.
By being aggressive with your budget, you can come up with an extra $200-$500 each month. Maybe more. Go berserk. Maybe one month you can only come up with $150, but the next month it’s $632. It doesn’t matter that it varies or by how much. With each paycheck, you hit that debt as hard as you possibly can.
Before you know it, that balance will gone. Then move to the next most painful or annoying debt. Maybe one of your credit cards has a dumb logo. Kill that balance next.
If you want structure and have a deep psychological need to know exactly when your debts will be paid off, you can use one of the popular methods. No one will hold it against you.
But if your debt pisses you off so hard you can’t think straight, you have to use this berserker method. Attack your debt. Be relentless. Free yourself.
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