Now that you’ve gotten honest with yourself and know your financial reality, it’s time to create a debt repayment plan.

Don’t let this scare you. This is a step in the right direction – it brings you closer to your financial goals.

No matter how much or how little debt you have, how much money you make, and what financial mindset you’re in – you need a debt payoff plan. Without a plan, most people veer off the beaten path, finding themselves spending their money elsewhere.

So what are the best debt repayment plans? Check out our two favorites below.


How many of you loved making snowballs as kids? Wasn’t it fun to create a bigger, and bigger snowball the more you rolled it? Keep that vision in mind as you create your debt snowball. You’ll start small, paying off little debts, but eventually, with the right effort, you’ll create that monster snowball that wins the fight.

The debt snowball method focuses on your debts in order of balance, smallest to largest. It’s about small wins.

You start with your smallest debt, paying any extra money you have toward that debt while making the minimum payments on all others.

Once you pay off your first debt, you’ve started the snowball. It’s a miniature snowball at this point. Now, take that ‘snow’ or money
used to pay that debt and add it to the next debt’s minimum
payment. You just made the snowball bigger.
Keep going until the snowball is so big that it wipes out your debt.

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Do you prefer something with more ‘oomph’? Do you want that ‘ta-da’ moment? The debt avalanche offers it, but it doesn’t provide quick results like the snowball, so beware.

The debt avalanche focuses on your debts in order of APR, largest to smallest. You attack the debt that costs you the most interest. Goodbye crazy high-interest charges. Using the same method, paying as much extra as you can to your first debt in line, you pay off that first debt and boom – you have an avalanche started. Move the money you paid to the next debt with the second-highest APR and get it out of the way.

By the time you’re done, you’ve created an explosive avalanche and you’re out of high-interest debt.
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Think about the method that you’d follow the most because it’s all about consistency. If you only use it once in a while, it won’t have the same effect. Which method would give you the greatest satisfaction and/or motivation to keep going?

Play with the numbers, and see where you stand. Look at both methods. How would the amount you can afford to pay to play a role? Would your progress be fast enough in the avalanche method or do you need those small wins from the debt snowball to stay motivated?

There’s no judgment – it’s all about your personal beliefs and goals. Choose the method that works for you, providing you with the greatest results.

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