Many college graduates leave school carrying student loan debt. These loans often vary in size and interest rate. You might be wondering what the best debt elimination method would be to find student loan relief. Take a look at the Debt Avalanche and the Debt Snowball methods to see which fits your finances best.
Finding Student Loan Relief With the Debt Snowball & Debt Avalanche
The Debt Snowball is all about forward momentum and feeling productive along the way. Starting with the smallest balance and moving up, the Debt Snowball quickly knocks off smaller debts one by one. It requires you to pay minimums on all your accounts except the one with the smallest balance. Pay this off as quickly as you can. Once it’s finished, use the money toward the next smallest debt and so forth. Use your budget to determine how much extra you can pay towards the target debt.
Instead of eliminating your smallest student loans first, the Debt Avalanche targets the highest interest rates first and then works its way down. It prioritizes the loans with the highest interest rate while doing minimum payments on everything else. This method will save you more money than the Debt Snowball, but it might not be as motivating since debts don’t get cleared as fast.
Organize Your Student Loans to Find Student Debt Relief
Student debt relief really comes from you eliminating your loans! So which debt reduction strategy works for you? If fiscal discipline isn’t your strong suit and your interest rates aren’t insane, you may lean towards the Debt Snowball. However, if you have high-interest rates from private student loans, the Debt Avalanche is probably best to achieve your goals and save the most money.
Watch this video to learn about some student loan repayment options.
It’s important to organize your student loans to make the best action plan. You need to know who your loans are with, the amounts of each individual loans, their interest rates, and if they are subsidized or unsubsidized. Additionally, you should also make sure you understand the differences between federal and private student loans, especially if you have both. You may consolidate the loans eventually, so it’s important to know what type of loans you have.
By organizing your student education loans and knowing your own financial tendencies, you can decide if the Debt Snowball or the Debt Avalanche is the best repayment method for you.