Updated: Apr 17
- If you have multiple sources of debt and each of them carry a balance there are two different ways to approach the situation.
- Avalanche approach - this involves paying the minimum monthly cost of the debt and using the additional money to pay off the debt with the highest interest cost. This method is effective as it pays down the highest interest cost debt first and will reduce your total debt cost quicker.
- Snowball approach - this involves paying the minimum monthly cost of the debt and using the additional money to pay off the debt with the smallest balance. The idea is to create a quick win and create some motivation to pay off the additional debt. This method helps with the mental aspect of debt but will result in overall higher interest costs as not always the highest interest debt is serviced first.
Please contact Merrick Financial Inc. and we can help sort out your debt issues as part of an overall financial plan.