What Debt Repayment Strategy Is Right for You?

Figuring out how to approach paying off a pile of debt is no easy task. This is especially true if you are juggling multiple debts at the same time, or have maxed-out credit cards. There are several different paths to consider in order to become debt-free. Here are the most common debt repayment strategies — take time to figure out which strategy is right for you. 

The Debt Snowball

The debt snowball is a debt repayment strategy that involves paying off the debts in order of smallest to largest balance. This means you will start putting as much money as possible into your smallest debt while maintaining the minimum payments on all other debts. Once your smallest balance is cleared, you will move on to the second smallest balance and repeat the same process until you are debt free.


Using the debt snowball strategy is a motivational trick — which is very important when you are dealing with debt, which can be very stressful. The idea is that you focus on the smallest debt so you see results soonest. Then you move on to the next debt and tackle it. This helps build intention and keeps you from focusing on (and worrying about) repaying multiple debts at the same time. While this strategy gives you a sense of accomplishment when paying off smaller debts, there are more financially efficient and less costly strategies to consider.

The Debt Avalanche

The debt avalanche strategy focuses on repaying your debt based on interest rate — i.e. how much it is costing you to borrow this money — regardless of the balance amount. So for this method, you pay off your highest-interest-rate debt first, while making minimum payments on all other debt. This helps ensure that you get rid of the most costly debt first and, as a result, minimize the total amount of interest paid.


From a financial standpoint, the debt avalanche strategy is the most economical and efficient. Still, it may be difficult to stay committed and motivated when it may take longer to pay off your very first debt. But choose this strategy if you are a master of efficiency and are motivated by the fact that you are lessening the total interest you will pay.

Debt Consolidation

Debt consolidation is a repayment strategy that trades multiple debts for a personal loan. In other words, you take out a single loan that you then use to pay off all the creditors you have debt with. Then you will repay the lender for the new single loan, frequently at a much lower interest rate than high-interest credit cards.


This strategy can be a good option for those who may feel overwhelmed with having to pay off multiple debts with different interest rates and balances. Debt consolidation then allows you to focus on a single payment. To learn more about whether debt consolidation is right for you, speak with a qualified financial advisor who can help you assess your financial situation and recommend solid solutions.

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