How to Pay Off Debt: The 3 Methods Explained

Some prefer to ask whether or not one should pay off debt rather than how to pay off debt, but for the purpose of today’s discussion, we’ll assume that paying off debt is something that you want to do.

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In this post, I’ll discuss the three methods of paying off debt. Then, I’ll tell you exactly how I paid off $200,000 in student loan debt in 19 months, and how you can use the same method to eliminate your debt quickly.

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How to Pay Off Debt: The 3 Methods Explained

#1: The Debt Snowball Method

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The reason that the debt snow ball method is good way to pay off debt is because it frames paying off debt in such a way that it provides better internal motivation. With each debt that is paid off, you are encouraged that you are doing the right thing.

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#2: The Avalanche Method

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The more you can throw at it, the larger the avalanche, and the sooner your debt will be gone.

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#3: The Snow Plow Method

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This was accomplished through three specific techniques. We paid the minimum payment on all of our debt akin to the snowball method, but then we focused a concentrated high monthly payment on our student loans.

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Then, according to The 10% Rule, we limited our lifestyle creep and applied 90% of any additional bonuses, increases in pay, or surprise money towards our Snow Plow’s target.

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How to Pay Off Debt: The 3 Methods Explained

Some prefer to ask whether or not one should pay off debt rather than how to pay off debt, but for the purpose of today’s discussion, we’ll assume that paying off debt is something that you want to do.

In this post, I’ll discuss the three methods of paying off debt. Then, I’ll tell you exactly how I paid off $200,000 in student loan debt in 19 months, and how you can use the same method to eliminate your debt quickly.

How to Pay Off Debt: The 3 Methods Explained

#1: The Debt Snowball Method

The reason that the debt snow ball method is good way to pay off debt is because it frames paying off debt in such a way that it provides better internal motivation. With each debt that is paid off, you are encouraged that you are doing the right thing.

#2: The Avalanche Method

The more you can throw at it, the larger the avalanche, and the sooner your debt will be gone.

#3: The Snow Plow Method

This was accomplished through three specific techniques. We paid the minimum payment on all of our debt akin to the snowball method, but then we focused a concentrated high monthly payment on our student loans.

Then, according to The 10% Rule, we limited our lifestyle creep and applied 90% of any additional bonuses, increases in pay, or surprise money towards our Snow Plow’s target.

SWIPE UP NOW TO READ MORE

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