Now, the rollover method can be used in two different ways or a hybrid of the two. Typically, in order to pay the least amount of interest and pay the debt off as quick as possible, you will want to pay off the highest interest rate debt first, the second highest interest rate second, and so on. We can call this method the “snowball”. However, some may find paying down the lowest balance debts first, regardless of the interest rate, can be more rewarding or motivating. Let’s say that someone has 5 debts they need to pay off, with 3 of the debts being a moderate to high balance, yet a couple of the debts are smaller say maybe $1000. They could find that paying off these lower debts first may give them a shot in the arm so to speak, because they are seeing progress. We can call this method the “avalanche”.

A way that might work for some, is to hybrid the two. Use the calculator to start paying down a couple of the lower balance debts in order to see more immediate results. Once those are paid off with a $0 balance, create a new calculator based on the snowball method, effectively paying the remaining debts down based on the highest to lowest interest rates.

In short, the purpose of the rollover method (snowball or avalanche), is such that when each debt is paid off, the freed-up payment amount from the paid off debt is then applied to the next debt in the plan, and so on until all debts are paid off. As you are about to see, the rollover method can save you a ton of money in interest charges, and get you debt free in a very short period of time.