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Posted 10 January 2023

Debt Recovery Methods

The holidays are over and you are starting to look at your spending. You may be realizing that you have overspent beyond your means. Don’t panic, we have two tips on how to start paying those credit cards down.

Snowball method

The snowball effect is one method. For this method, you would first gather all of your debt and make of list of smallest to largest, in terms of amount. The first step is to pay off the smallest debt, then once it is paid you take the amount you were paying and put it toward the next smallest debt. As this is taking place you would continue to pay the minimum payment on any other cards. This will continue to grow as you continue to pay off the debt. Eventually you will be making a much larger payment to the largest debt you have and are just getting closer to paying it off. This method works for those who like to see the payments gone sooner. This is referred to the snowball effect because it is like rolling a snowball down a hill.

Avalanche method

The Avalanche method is different in which you would be paying off debt by interest rate. List your debts by highest interest rate to smallest. At that point you would start making payments on the debt with the highest interest rate. Once the loan with the highest rate is paid off you will then take that payment and add it to the next highest rate payment. By paying off the debt with the highest interest rate first, you will pay less in interest overall. This may take longer to see the results but you will be saving money in the long run.


Be sure to celebrate any success with paying off your debts. Reward yourself for achieving these goals. Start to think of new ways to save for the holidays to avoid the debt. Creating a spending plan will give you a great start to managing finances you are expecting.

©2023 Reseda Group LLC, used under license.