Couple with shopping bags and coffee walking in town

Two Ways to Reduce that Debt

by Michelle Lefebvre

According to the November 2020 COUNTRY Financial Security Index, 27 percent of Americans say that paying down debt is a top priority for 2021.* Odds are that this isn’t just a one-time goal – reducing debt is an ongoing concern for many people. Fortunately, it’s not as hard as you’d think.

Reducing the amount of interest you’re paying really can be conquered. Two of the most common ways to attack debt have one thing in common – they’re both related to snow.

Avalanche approach

In many cases, credit card interest rates are higher than rates on cars, mortgages, student loans or medical bills. Paying interest on debts is wasting your hard-earned money that could instead be used to build up an emergency account or to pay for immediate needs with cash.

Of course, in some cases your credit card could have a “low introductory rate”, but for this purpose we’ll assume that your credit cards have the highest rates.

So that’s where you’ll start when taking the avalanche approach to attacking debt. Look at your most recent credit card statements or log into your online account so you can rank your debt based on interest rate. If you have two cards with the same high interest rate, start with the one that has the highest balance.

As you begin to make bigger payments on those cards with high rates, you’ll notice that you’re paying less and less in interest each month. This avalanche starts at the top, gains momentum and moves you toward a more rapid reduction in debt, increasing your overall peace of mind.

Snowball strategy

Although the avalanche method works for some people, others prefer to knock out their debt by starting small. This will take a bit longer to achieve your goal, but it’s a strategy that works better for some people. It’s similar to those who decide to lose weight with intense workouts and strict diets vs those who see
better results with smaller, achievable modifications to their health habits.

With the snowball theory, you’ll gather all of your debts and rank them by the total amount owed. Maybe you have credit cards with balances of $250, $1,500 and $2,000 as well as medical bills of $750 and $3,200. You start picking them off one-by-one as you would in a snowball fight.

In this case, you’d pay off the $250 as quickly as possible so you can cross it off your list. Next, you’d conquer the $750 in medical fees. You’d continue to make the minimum required payments on the other debts to avoid late fees or the risk of having the accounts sent to collections. Getting one less bill each month feels great! Additionally, as you pay off the smaller debts, you may choose to reallocate what was directed towards them to the larger ones allowing you to pay them off even quicker!

Obviously, this is a very generalized explanation, so you’d need to look at your own situation to choose which snowballs you’d throw first.**

A snowy forecast

Whether you decide to start at the mountaintop to attack your debt with an avalanche or you’re more comfortable pitching snowballs to get things rolling, you’ll be relieved to see your debt melt away like snowflakes on a sunny day.

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COUNTRY Financial® is a family of affiliated companies (collectively, COUNTRY) located in Bloomington, IL. Learn more about who we are.

* About The COUNTRY Financial Security Index®

Since 2007, the COUNTRY Financial Security Index has measured Americans' sentiments of their personal financial security. The Index also delves deeper into individual personal finance topics to better inform Americans about the issues impacting their finances. Survey data, videos and analysis are available at

The COUNTRY Financial Security Index was created by COUNTRY Financial. This survey was conducted by Ipsos, an independent research firm, commissioned by COUNTRY Financial. Surveys were conducted using a national online research panel designed to be representative of the general population and includes responses from 1,015 U.S. adults over the age of 18 for national surveys with additional interviews completed in Georgia, Illinois, Missouri and Oregon to bring the total in each of those states to 500 completed surveys.

** This article is not designed to provide tax, legal or financial advice. General information is provided for educational purposes. Consult a financial professional for specific advice.