There are many different strategies to eliminate debt. Two of the most popular strategies are the “Snowball Effect” and “Avalanche Affect”. The Snowball Effect attacks the smallest balances first. The Avalanche Affect attacks the debts with the highest interest rates first. Of course each person’s situation is different. Use this Debt Reduction Calculator below to help build a successful debt reduction strategy.
Debt Reduction Strategies
Strategy 1 – Snowball Effect: Paying the lowest balances first allow you to move on to the next debt sooner while applying the savings from the payment previously eliminated. This creates the “snowball” effect.
Strategy 2 – Avalanche Effect: This strategy calls for paying debts with higher interest rates first. By doing this, you save more in the long run but the end result generally takes longer.
Strategy 3 – Ordered into the table: Use this strategy to mix and match how you pay off the debt. You may choose to pay lowest balances and then highest rates or vice versa.
Strategy 4 – No Snowball: This strategy is more to experiment, for instance, to see how long it takes to pay off debts. In some cases, results could show up to 30 years which may cause calculation errors.
Strategy 5 and 6 – Custom Highest first and Lowest first: Here you can manually enter in the debts you want to pay first to last by entering the order in the “Custom” column.
Debt Reduction Calculator
Paying off your Debt the Quickest
Paying off debt shouldn’t be a marathon. It’s a sprint to the finish. The quicker you pay off your debt, the sooner you can live your life more freely with less stress. In order to do this most efficiently, cash flow is extremely important. For most people in debt, most or all of their cash flows to the minimum payments on their credit cards, leaving very little to pay down on the debt as a whole.
Refinance and win the race
It would be very hard to argue the fact that refinancing not only offers the greatest potential to pay off debt but also the most monthly savings. Paying off the most debt is obviously the best solution to become completely debt free quicker. The greater the monthly savings, the more payoff power you have. With interest being more than likely tax deductible, the benefits become that much greater.
VA Debt Consolidation Refinance: Benefits of Serving in the Military
Of course you don’t have to be a veteran to refinance but serving in the military does have some major benefits in in area. Unlike anyone else, veterans and service members have the ability to completely maximize their debt reduction efforts and really make a leap forward towards their sprint to the finish. A VA Debt Consolidation Refinance allows you to utilize your home’s equity up to 100 percent of the value of your home. This will allow you to pay more debt off than someone that can’t utilize all of their most important resources.
Find out how much you can save with a VA Debt Consolidation refinance by getting a quote. Take the estimated savings from the loan and add it to the monthly payment in the Debt Consolidation Calculator. Then see how much you can save and how quickly you can become debt free.
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Debt Consolidation Calculator courtesy of Vertex42, LLC