How The Debt Avalanche Method Can Help You Get Debt-Free Faster
If you’re reading this post, you’ve probably heard about the debt avalanche method of paying off your debt and want to figure out its very essence. And that’s exactly what we’ll talk about here.
Becoming debt-free is all the rage right now on social media. Instagram and YouTube are brimming with videos and posts from multiple "financial literacy influencers" recounting their own stories of acquiring massive debts and then paying it off using various methods #debtfreecommunity. One such method, that's been accumulating more and more popularity as time goes by is the debt avalanche method.
All You Need To Know About The Debt Avalanche Method
What Is The Debt Avalanche Method?
To put it very simply, the debt avalanche method has the borrower prioritize paying off high-interest loans first. To properly plan out your debt repayment strategy, you will need to sit down and make a list of all your debt. Then you'll need to rearrange that list putting the one with the highest interest rate at the top and lowest - at the bottom.
When you finally start attacking the debt payoff, you will be putting all your extra cash towards that highest-interest debt in an attempt to pay it off as fast as possible, while making minimum payments on the rest of your debt.
When the highest-interest debt is paid off, you will start putting the monthly payment you were making on it towards the second highest-interest debt (along with the mandatory minimum payment you were already making). This helps you accelerate your payoff plan and become debt-free faster in two ways:
- With each paid off debt, you have more and more "free" money to make extra payments towards your debt, paying them down faster and faster;
- Since you're prioritizing paying off the highest-interest debts, there's less time for them to accrue interest which would extend your overall payoff timeframe if you stuck to making just mandatory minimums or prioritized lower-interest debts.
Why Isn't Everyone Using The Debt Avalanche Method?
As good as the debt avalanche method sounds in theory, it's not for everyone. Often the highest-interest debt is one of the larger debts people have, and it takes time to pay it off and start making a notable dent in the overall payment plan.
To put it shortly, you have to slog through some mud first, before you can accelerate and start running. For certain people, this slow start can be demotivating, and they may have trouble sticking to it over a prolonged period, getting side-tracked unless they're able to make noticeable headway.
If you're one of these people, the debt avalanche method may not be quite suitable for you. In this case, you may want to try the debt snowball method first (the strategy which has you pay off your debt smallest to largest).
You can always switch to the debt avalanche method after getting rid of your smaller debts and freeing up cash for substantial payoffs along with gaining the motivation which comes with the knowledge you've got one less loan to pay off.
I'm Debt-Free! Now What?
Often when one becomes part of the debt-free community, their views about debt become radically negative even if it wasn't so before.
And while we can all agree that uncontrolled debt accumulation is dangerous and can lead to financial ruin, eschewing debt can also come with financial pitfalls. Avoiding applying for a mortgage in hopes of saving a larger down payment may end up missing out on a lucrative deal, avoiding getting a business loan may hinder your expansion, avoiding getting a personal loan may lead to problem escalation and further costs down the line.
Consider this example - say you have a toothache and need to cover a dentist's appointment out of pocket. You may think postponing the visit until you save enough money as a smart financial decision, but in reality, an easy cavity fix may end up requiring an emergency root canal. In similar time-sensitive cases, try to get a title loan online or in-person with Missouri Title Loans, Inc., cover the costs ASAP, and then pay off your debt in peace.
What Are Car Title Loans?
Car title loans are short-term type of loans that let you use your title to borrow money. With Missouri Title Loans, Inc., you can get up to $15,000 same day cash if you qualify. All you need is to be 18+ years old and outright own a vehicle. The title to it should be in your name.
How To Get Car Title Loans At Missouri Title Loans, Inc.
You can easily streamline the process by submitting an online application for car title loans on our website for your chosen location, and in a few minutes, you'll get a call from our loan representative. The representative will provide full information about the qualifying requirements and required items (you'll need a state-issued ID, your car for inspection, and the car's lien-free title in your name), and they'll answer any questions you may have.
Once they've made sure everything's clear, they'll schedule a meeting with you, so you can bring the required items in and finalize the process. When you meet, the representative will assess your items to determine the loan amount you qualify for. If they approve you, you'll get the cash either the same or next day.
Get Started Today!
Learning to manage debt is an important skill that will help you become more financially secure in the future, and knowing the tools and methods to deal with it can make this process less painful. So, keep in mind the information above and learn dealing with your debt today to tread the path toward the debt-free financial future.
And whenever you’re ready to deal with the emergency issues with the help of car title loans in Missouri, get in touch with us either by calling 800-514-7724 or submitting a short inquiry on our website.
Want to know more? Increase your knowledge of credit and debt here!
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.