Escaping Debt

Financial well-being May 4, 2017 By Jennifer Henagar

Escaping debt is a very important element of Financial Well-Being. One out of every three households carries credit card debt from month-to-month, according to the 2016 Consumer Financial Literacy Survey by the National Foundation for Credit Counseling, or NFCC.

For some households, debt is a burden that has them dodging creditors’ calls and struggling to pay the minimum monthly payments. If you’re overwhelmed by debt, or just ready to be debt free then keep reading as we want to share two proven strategies to help you on your debt free journey. 

The “Debt Snowball” and the “Debt Avalanche” strategies focus on applying the most money possible to the lowest balance (snowball) or the highest interest rate (avalanche), while paying the minimum monthly payment on all other loans. 

Debt Snowball

The goal of the debt snowball is to pay off the smallest debt first.

To create a debt snowball, you will list your debts in order of amount owed – from smallest to largest based on your payoff balances. Note: You will not include your mortgage loan at first as you can focus on that after all of your other debt is paid off. 

Each month, make the largest payment you can afford to the debt with lowest balance (throw every dollar you can at it until it’s gone). Continue making only the minimum monthly payments on all other debts. When the smallest debt is paid off, repeat the process with the next smallest amount owed. Be sure to apply the payment you were paying to the paid off debt along with the minimum payment you’ve been paying so the payment keeps getting bigger with each payoff. 

The debt snowball will help get you out of debt while giving you some quick wins and allowing you to build up momentum which can help to stay focused as you work through your list of debts. This is truly about behavior modification. The snowball has human psychology on its side.

Becoming debt-free can feel impossible, but the debt snowball has two advantages. First, it provides you with a clear plan. Second, you will be able to start marking progress quickly. 

Debt Avalanche

The goal of the debt avalanche method is to pay less interest overall which can save you money. 

To create a debt avalanche plan, list debts from the highest interest rate to the lowest interest rate. Note: You will not include your mortgage loan at first as you can focus on that after all of your other debt is paid off. 

Each month, make the largest payment you can afford to the debt with the highest interest rate (just like the snowball method you will throw every dollar you can at it until it’s gone). Continue making minimum monthly payments on all other debts. When the debt with the highest interest rate is paid off, repeat process by paying off the debt with the next highest interest rate (use payment amount from paid off card to apply with minimum payment and any extra amount you can find in your budget).

The debt avalanche has math on its side. Also, this method generally results in paying less interest, thereby saving money. 

Tips for Escaping Debt

  1. If you find that you’re in debt, stop borrowing and begin paying with a debit card or cash instead. We have to stop the bleeding and live on a budget. 
  2. When you have more expenses than income you have three options: 1) earn more income 2) spend less by cutting down on our wants and sticking to our needs 3) try a combination of the one and two. 
  3. Try your best to pay more than the minimum required payment each month to get yourself out of debt. Consider selling things you do not need to bring in some extra income. 
  4. Look for a credit card with a lower interest rate and do a balance transfer, if possible but know that you cannot borrow your way out of debt. Budgeting really is the key. 
  5. Seek assistance from a Financial Coach as a coach can support you, provide tools, and be an accountability partner during your debt-free journey. First United Bank offers financial coaching. 
  6. When you pay off a debt, put that money toward paying off another one, as this will help you to become debt free. Don’t increase your spending until your debt is paid off. 
  7. Save for purchases rather than using credit. If you can’t afford to pay cash for it then wait and save until you can. Start with a small goal then keep increasing it with time. The joy of paying for something you have saved up to buy can be very rewarding.

Which method is best for you? 

The key to becoming debt-free is sticking with a plan. The snowball method is incredibly appealing when you want to taste success quickly because your focus narrows over time on the biggest debts. If you feel like you need quick wins then the snowball might be best for you. But there is no disputing that you will save more money if you use the avalanche method and have the discipline to stick to it. If you don't need the psychological boost of the snowball, consider using avalanche and attack those high interest rate balances first.

For more information, please feel free to contact us at, or check out these free calculators to help you start paying off debt:


By Jennifer Henagar

Director of Financial Well-Being, First United Bank - Durant

Jennifer Henagar has worked in the financial services industry for over 20 years. She is currently the Financial Well-Being Director but has a diverse background in Wealth Management, Human Resources, Organizational Development, Executive & Professional Coaching, and various positions at a Credit Union. 

Jennifer graduated with a Bachelor’s degree in Finance from Southeastern Oklahoma State University and a Master’s degree in Business Administration from Texas Woman’s University. She obtained her graduate certificate in Executive and Professional coaching from the University of Texas at Dallas in 2015 and earned her Ramsey Solutions Master Financial Coach designation in 2016. 

Jennifer and her husband Greg live in Atoka County and have five children and two grand-children. For fun, the family enjoys bowfishing and traveling to new places.