What are the different ways to pay down my debt?
There are generally two different strategies when it comes to paying down debt: the debt snowball and the debt avalanche. Invest Forward employs the avalanche method to help you save time and money when paying down debt.
Snowball: The debt snowball method aims to start with small wins and build momentum over time. Using this method, you start paying off your debt according to the smallest balance first, while paying the minimum on the rest. This helps borrowers see results right away and get a boost of motivation. The major downside to this strategy is that it often takes longer to eliminate all your debt using this method versus the avalanche.
Avalanche: The debt avalanche method differs from the debt snowball method because rather than focusing on the smallest balance, it focuses on the highest interest rate. Depending on your interest rates and balances, you could stand to save thousands of dollars and shave off time from your repayment period by using the debt avalanche method.