Debt can feel like a heavy chain, but the right repayment strategy makes it manageable. Two of the most popular methods are the Snowball and Avalanche approaches. Let’s break them down.
The Snowball Method
With the snowball strategy, you focus on paying off the smallest debt first, regardless of interest rate. Once cleared, you move to the next smallest, creating momentum.
- Pros: Quick wins keep you motivated.
- Cons: You may pay more interest overall.
Example:
- Credit card A: ₹10,000 at 18% interest
- Loan B: ₹40,000 at 12% interest
- Loan C: ₹80,000 at 10% interest
You’d clear A first, then B, then C.
The Avalanche Method
Here, you pay off the highest-interest debt first while making minimum payments on others. This saves money in the long run.
- Pros: Lowest total interest cost.
- Cons: Progress may feel slower, reducing motivation.
Example: Using the same debts, you’d attack A first (18%), then B (12%), then C (10%).
Which Is Better?
- If you need motivation → Snowball works better.
- If you want maximum savings → Avalanche wins.
Conclusion:
The best method is the one you’ll actually stick to. Whether you choose the snowball or avalanche, consistency is what will finally set you free from debt.