This is the age old debt management debate. My latest guest, Certified Financial Planner, Jen Swindler, gives her opinion on which method is typically the best.
🔹Debt Avalanche: focus on the highest interest rate debt first and work your way down to the lowest rates
🔹Debt Snowball: focus on the smallest balance regardless of interest rate,
I tend to take a modified avalanche method where I lump debts into interest rate buckets and then typically focus on the smallest balance first. So if you have 3 credit cards all in the 20-25% range, I’m going after the smallest one to build up some momentum, but focusing on all of those high interest rate debts versus lower rate personal loans regardless of how much is owed on them. The main exception would be if the client is needing to improve their credit scores for an upcoming house or car purchase in which case I’m being more strategic with reducing their credit utilization % per card.
Check out the full episode at either link below:
🎥 https://youtu.be/CoiZfGdxtHw
🎧 https://adamcolemanmortgage.com/podcast
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