Get smarter about your money with this Financial Wellness Minute. I'm Vic Dale, manager from the
Alexandria Office of Mid Minnesota Federal Credit Union. When it comes to paying off debt, there are several strategies you can consider. Two popular methods are
the debt avalanche and
the debt snowball approaches. The
debt avalanche method involves tackling debts with the highest interest rates first.
- First, list all your debts from highest to lowest interest rate.
- While making minimum payments on all debts, allocate any extra funds towards the debt with the highest interest rate.
- Once that debt is paid off, move on to the one with the next highest rate.
This approach helps you save money on interest in the long run. The
debt snowball method focuses on paying off smaller debts first.
- With this approach, create a list of debts from smallest to largest balance.
- While making minimum payments on all debts, direct any additional funds towards the smallest debt.
- Once that debt is paid off, roll the payment amount into the next smallest debt.
This method provides a psychological boost as you see quicker wins, which can motivate you to keep going. Consider your goals and resources and choose the approach that aligns best with your needs. Want to know more or have a weekly financial wellness tip sent to you? Sign up below or, contact your local
Mid Minnesota Federal Credit Union Office.
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