The Debt Snowball Method vs. Debt Consolidation | A Mini Guide 


Repaying the debt isn’t just about making monthly payments. It’s a lot more than that. You need to have a proper strategy to pay off your debt and it’s especially important for those who have multiple debts hanging on their heads. 
If you can pay off your debt all at once with a lump-sum amount, it’s great. In case you cannot, I suggest you look into different debt management strategies and follow one that suits you best. 
In this article today, I’m going to weigh two of the most prominent debt management methods, the debt snowball method and the debt consolidation. Read it carefully and decide which one works better for you:

The Debt Snowball Method 
Starting with the debt snowball method, it works well for paying off multiple debts. It doesn’t require a lot of effort on your part as this method is all about instant gratification, so it will keep you motivated on its own. 
In the debt snowball method, you pay off the smallest debt first and when it’s done, you move on to the next smallest one. When one of your debts is paid, you feel a sense of achievement that keeps you motivated for the future. 

Pros and Cons of the Debt Snowball Method 
The great thing about the debt snowball method is that it saves you a lot of time. Paying off multiple debts is not easy and it requires time, but not with the debt snowball method. It goes without saying that paying off small debts is easy, so this method breaks down the entire process for you, making things simpler and easier. 
On the other hand, the biggest disadvantage of the debt snowball method is that it doesn’t address the issue of the interest rate. You hit the smallest debt first, regardless of the interest rate it comes with and in this way, you entirely neglect the one with a higher interest rate. Hence, the debt keeps on accumulating on your head.

Debt Consolidation 
Another useful debt management method is debt consolidation. It’s a process that involves refinancing your existing debt by taking a consolidation loan. It especially works for people who are struggling with the interest fee that comes with the debt. 
It is followed by many people around the world. It may interest you that debt consolidation is also used by states and governments to pay off their debts. Many states take consolidation loans when they’re unable to manage on their own due to their shrinking economies. 

Pros and Cons of Debt Consolidation 
The issue of the accumulating interest rate is not addressed by most debt repayment methods; however, it’s not the same with debt consolidation. When you have a lump-sum amount to pay off your debt, the interest rate goes out the window. 
The only downside of debt consolidation is that many people still feel skeptical about it as they don’t want to take another loan just to pay off the existing debt. It makes them feel caught in a web of debts, which is frustrating, of course. However, consolidation loans come with minimal interest rates; hence, you don’t have to worry. Plus, you’ll get more time, so that would also be a sigh of relief. 

The Final Word… 
It’s pretty simple if you choose the correct strategy. From the time to the interest rate and your monthly earnings, take everything into account before you choose a debt repayment method. The two mentioned above are surely among the great ones, so do consider them as well. I wish you all the best, my friends. Stay positive! 

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