Helpful Tips For Using The Avalanche Method To Pay Off Debt
If you’re living with a mountain of debt — which the average debt in America is $53,000 — you’ve likely received a lot of advice on how to pay it off. Whether you use the avalanche method to pay off debt or something else, there are plenty of options out there.
The best method for you is the one that works best for your specific situation and spending habits. One popular approach – as I mentioned – is the avalanche method, which can be effective for many if you follow it correctly. Here are a few tips for implementing the avalanche method to pay off debt.
What Is The Avalanche Method?
By following the avalanche method to pay off debt, you’re approaching your debt by eliminating your payoff balance by focusing on your balance tied to the highest interest rate. You are paying extra toward that debt but still making your minimum payments on your other sources of debt.
The goal is to get rid of your most expensive debt, and then using that gained interest back to help you make payments quicker on the rest of your debt. In general, credit cards are tied to the highest interest rates, so you’ll likely be focusing on that debt first.
Even if the total amount of the high-interest rate debt is lower than some of your other forms of debt, you’re targeting that first because it has far more interest than other debt. The avalanche method also helps you tackle compound interest — the increased interest that you have to pay that accumulates on top of your already existing interest.
Basically, it's interest that grows because of new totals of debt that are created by having the basic interest in the first place.
Avalanche Method Tips
The trick with having this method work for you is to understand how the method is supposed to go. Here are a few tips on how to make the avalanche method to pay off your debt work for you and your financial situation:
- First, be honest with yourself. Write out all of your debt sources, how much you owe, and the interest rates associated with each.
- Once you’ve located the debt source with the highest interest, come up with a plan on how much you will contribute to paying down that debt and how often. It could be one big payment, paired with a few monthly smaller payments to eliminate it completely. Be sure to commit to something you can realistically manage.
- Don’t forget your other debt sources because you’ll still be paying the minimum owed on those each month. Those payments may play a factor in a timeline for paying off the highest-interest debt.
- If you begin your avalanche method plan and something is not working — perhaps you don’t have enough for your basic needs — don’t be afraid of putting in the work to reevaluate. Tweak your payments to the largest interest-tied debt to reflect what you can actually handle to live comfortably.
- After you eliminate that highest interest rate debt, move on to the next-highest interest rate source, then the next, and so on.
Based on the money you’ll save by taking care of that high-interest rate, your path to eliminating the next debt source may be quicker and easier.
Get Some Additional Help With An Auto Title Loan
With the avalanche method to pay off debt, you can easily start to take control of your finances. But everyone needs some help now and then – especially when emergencies hit while you are unprepared.
If you’re coping with a short-term financial emergency, one option is an auto title loan from Carolina Title Loans, Inc. in South Carolina. In as little as 30 minutes, you may qualify for an auto title loan of up to $15,000 — and you get to keep your car.
We make it easy to qualify for a title loan online. You need to be at least 18 years old, have a driver’s license or state-issued identification, have a lien-free title to your car, and have your vehicle available for inspection.
You can also pursue an auto title loan regardless of your credit history at Carolina Title Loans, Inc., and the title loan is not reported to credit agencies. Fill out our online form to get started on the process.
Financial Help Is On The Way
It feels great to finally take control and use the avalanche method to pay off debt. Remember these tips if you think the avalanche method to pay off debt could work for you. And if you need a little extra assistance to overcome a financial emergency, Carolina Title Loans, Inc. is here to help. Go online to fill out our form, search for one of our many ‘auto title loans near me’ locations, or give us a call today.
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.