For the student, one of the unfortunate realities facing anyone leaving or about to leave the schooling atmosphere is debt. Many students with families unable to pay for their schooling or lacking the funds to do so themselves turned to various loans from a myriad of sources in order to cover the cost of their education.

However, when the time comes to finally repay many of these debts, some students are stumped at just how they should go about attempting to pay back the seemingly intimidating amount of money for their college experience. Two very popular methods for freeing yourself from college debt and even beyond into the real world are the snowball strategy and the avalanche strategy.

Snowball

The snowball debt strategy is the more accessible of the two methods and for people with access to less funds, offers a more advantageous initial setup than the avalanche. First, get a good handle on your debts and line them up from the smallest to the largest amounts ignoring interest rates. Now, while maintaining all minimum payments to avoid incurring fees which will hurt you in the long run, the debt snowball functions by the student putting increased payment efforts towards the smallest debt first.

Once the smallest debt is out of the way, take the money that you were putting towards it and then apply it now to the second lowest and so on. The capital brought against the debt will increase with every subsequent amount paid off and can keep people motivated as they will quickly see tangible evidence of their debts beginning to disappear. Since the minimum payments are being maintained and extra efforts are given towards the smallest debt, they will begin to wear down faster than just random payments.

The snowball method is slower however and will cost more money in the duration of its usage than the avalanche. Since this method tackles the initial principal of the loan or debt, it ignores the interest which anyone has held large amounts of interests can confirm, can spiral out of control

Avalanche

The avalanche strategy by contrast, works in the complete opposite means by when examining which debt to pay first looks at the interest rates. Because interest can cause debts to grow out of control, the avalanche method seeks to pay back debts by tackling specifically these loans first. When lining up your debts using this method examine which have the highest interest rates and begin putting more payments into those first.

As the largest potential cause for concern shrinks, the debt will begin to sink from top to bottom as the amount of money you bring to bear on the highest amounts begins to crush the smallest ones. Avalanche method deals strictly with interest rates first thereby eliminating compounding interest and saving more money than the snowball strategy in a faster amount of time. By paying off the highest interest.

However, as a consequence, the avalanche method takes more time as it tackles larger amounts first and can encourage poor habits as the payer doesn’t see the immediate effects as in the snowball strategy. This can cause problems as the student trying to pay his debts with this method might lose confidence and miss or stop payments. Overall, the avalanche method will pay off in a faster and less expensive means though as debt payment is arguably about habits, the snowball method is better at cultivating them.