Being in debt is more than just a financial issue: it’s also a highly emotional one. When you’re in debt, it’s easy to feel hopeless, and hard to see a light at the end of the tunnel. A good deal of research has gone into finding the best way to pay down debt. Two frequently discussed options are the “avalanche method” and the “snowball method.” Let’s see what the research shows, and which works best for you.

Both methods start with paying your minimum monthly payment on each bill to avoid paying fees. But after that, using the snowball method you begin by assembling a list of all of your debts in the order of their outstanding balance. Then you take any money left after paying the minimum and apply it to the debt with the lowest outstanding balance. The idea is that you slowly but surely knock off debts one by one, and as you eliminate each debt you also eliminate its monthly minimum, thus giving yourself more available cash to pay off each succeeding debt.

The avalanche method uses a similar process, but instead of creating your list of debts in order of their balance, you instead order and pay them by the interest rate that you’re paying. The idea is that your debt will cost you less money overall if you eliminate the highest interest rate debt first.

Though both methods work, and the avalanche method makes more financial sense, analysis of actual debt repayment shows that people who use the snowball method are more likely to pay off their debt because the method provides a psychological boost: as each bill disappears, the debtor feels that they have accomplished something.

To determine which method will work best for you, you should start by doing a financial analysis of what the real-world impact would be of each method so that you can see the money that using the avalanche method would provide. After doing that, decide based on your self-knowledge which one you’re more likely to stick with. If you need the emotional boost of eliminating bills fast, then the snowball method is probably the smartest answer, even if it isn’t the most rational one.

If you are facing debt and you don’t believe you can pay it down, then you may need to talk to an attorney. Contact us today to set up an appointment to discuss your situation.