How To Pay Off Your Debt For Good

The average credit card has a balance of $6,354 and the average consumer has 4 credit cards. That’s $25,400 in credit card debt — not a small amount to get out of, so what do you do?

Budgeting your way out of credit card debt takes consistency, patience, and plenty of dedication, but it’s not as hard as you might think. There are two main ways to pay off credit card debt — the debt snowball and debt avalanche method.

One isn’t better than the other, it’s a matter of personal preference.

What is the Debt Snowball Method?

The debt snowball method focuses on your account balances rather than the interest rate or monthly payment.

You pay the debts off in order of balance, smallest to largest. The idea is that you have ‘small and quick wins’ by paying off the smallest credit card first. When you pay off that first card and see success, you should carry that motivation onto the next debt in line until you eventually pay off all of your debt.

How to Use the Debt Snowball Method

Here’s a quick example of how it works.

John has four credit cards, a medical debt, and a car payment. He orders the debt by balance size as follows:

• Credit card 1: Balance $1,000, Payment: $25 and APR 12%