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More often than not, in Life Institute’s Stewardship Lifestyle Seminar that we hold in churches all across the country, we speak with people that are steeped in debt.  Most of these people are overwhelmed with what one would call “Consumer Debt.”  This is debt for daily things, simple things, and even luxurious things (like vacations and cars) that they put on credit cards, cash advances and/or take out personal loans to cover those expenses. Sadly, when people get into this groove of living larger than what their monthly financial income is, money has to come from somewhere, and it is usually through credit cards and loans. Those monthly credit card balances and extra loan payments dig into daily living expenses and weigh a person down both financially and emotionally. Debt is something that you feel!

Well, in today’s episode we would like to take you through two of the best ways to take the crushing burden of debt off your shoulders. Join us as we explore: Debt Snowball vs. Debt Avalanche. 


Why start the process of debt reduction?

  • Proverbs 22:7 – “The borrower is slave to the lender.”
  • 2 Kings 4:7 – She went and told the man of God, and he said, “Go, sell the oil and pay your debts. You and your sons can live on what is left.” (PAY YOUR DEBTS)
  • PS. 37:21 – “The wicked borrow and do not repay…”
  • Debt presumes on the future, and we have no guarantee of tomorrow.  Let us NOT put our family in debt knowing that there may be a chance that they will have to make payment if  you are gone!
  • Debt denies God the opportunity to provide, so consider not going into debt and trust God for His great provision!
  • By getting out of debt, you can secure a much better future for you and your family (being out of debt).
  • As you release yourself and your family from debt, you get the joy of being more involved and generous with Kingdom giving!

What is the Debt Snowball?

  • The debt snowball is a method of debt repayment in which a person lists all of their debts from smallest to largest (not including the mortgage), then devotes extra money each month to paying off the smallest debt first, while making only minimum monthly payments on the other debts. (Investopedia)

What is the Debt Avalanche?

  • The debt avalanche is where a debtor allocates enough money to make the minimum payment on each source of debt, and then devotes any remaining repayment funds to the debt with the highest interest rate.


WHY are these called what they are?

  • Snowball – start with the small debt and roll payments into the others where you get your payments bigger and bigger as you roll along on debt reduction!
  • Avalanche – you jump right off at the beginning and take on the largest interest rate. Start with the big one and end with the smallest!


What is the difference between the two? (Debt Snowball vs. Debt Avalanche)

  • With the Debt Snowball, you get quick psychological gains at a more frequent pace. This greatly assists in getting and keeping momentum in debt reduction and it also creates an element of anticipation and excitement each time you can kick a debt to the curb!
  • With the Debt Avalanche, your momentum is reduced along with your overall financial outlay for reducing all the debt. Because you are tackling the highest interest rate debt first, it may take longer to get that first debt kicked to the curb! But, as you do your debt reduction this way, you mentally know that your overall payments will be lower because you are knocking out your debtors from the highest interest rate to the lowest…(lower length of time on the highest and higher interest rate debts).
  • A major difference between the two is what we consider the Behavioral/psychological approach vs. the math nerd approach!


Which one of these two debt reduction plans is better?

  • Both plans work very well. But what is consumer debt a symptom of? Consumer debt is first and foremost psychological before its ever mathematical. The biggest problem in debt elimination is that people are using the “shotgun” approach to paying off their debt. They are spreading all of their debt destroying power (their income) out to all their debts and never making progress. The best way to destroy your debt is with laser-focused intentionality. It’s not about the math, it’s about psychology! People feel debt when you wake up in the morning. The only way to win the war against debt is to get quick psychological victories. This will allow you to see the light at the end of the tunnel and keep you motivated to see your debt snowball through to the end. And that is the power of the debt snowball. For most, the Debt Snowball works much better.
  • Remember, you did not use math to get yourself into debt. It was psychological. Because of this, you need a psychological way to win the war against debt.


What are the problems and perks of doing one over the other?

  • Problems:
    • The Debt Snowball will take a little longer to get out of debt.
    • The Debt Snowball will cost you more in the long run to get out of debt.
    • The Debt Avalanche will not give you the quick psychological wins you may need to keep going.
  • Perks:
    • Both get you out of debt if you stay the course!
    • The Debt Snowball gives you faster “wins” in debt reduction. It gets you excited about knocking out your debt!
    • The Debt Avalanche, if you stay the course, will give you an overall lower total of payments.


What debt reduction method should I use?

  • In the battle of Debt Snowball vs. Debt Avalanche, we wish that it would be so simple for us to just pick one for you! You need to process what is going on inside of your heart and mind. Do you need quick “wins” to keep moving? Are you worried that overall you could be spending more on debt repayment than what you could? These two questions are to be processed in your decision making. Ultimately, you need to pick one that works for you. Once you do pick either the snowball and avalanche, there needs to be intentional focus and consistency in doing it!


What else do I need to know/do to make me succeed in debt reduction?

  • Behavioral change is needed! Dave Ramsey on his website says this: “Winning with money is 80% behavior and only 20% head knowledge. If you can get that person in the mirror to change their habits, there’s no stopping you!” It is difficult to put it all together, but counseling and psychological professionals all make it clear that for one to form a new habit, there needs to be at least a 21 day commitment to bring about a changed behavior or a newly learned habit/behavior!
  • Accountability! You may do better if you have someone hold you accountable for your spending habits and debt reduction.  If you are married, you and your spouse should link arms and do this together. If you have kids in the home, you may need to have a family gathering and speak to them about your new plan and let them know/see the desired outcome! This can be a GREAT learning tool for your kids, especially if you work diligently and succeed in paying down all debt in the time-frame that you have allotted.


Stewardship Application

As we said in the opening: Debt is something you FEEL. You wake up feeling it. It weighs you down throughout the day, and you go to sleep wondering how you will ever get this burden off of your shoulders!

  • Today we gave you some Biblical reasons why one ought not be in, or live with debt.
  • We also shared with you two viable ways that one can reduce their debt in a quick fashion.
  • And finally, we want you to know that in choosing to go down the road of reducing debt:
    • You will change the outlook of your life!
    • You will take the weight of debt off your shoulders and neck and be able to stand tall again.
    • You will, in time, have financial resources to pour into greater Kingdom ministry work.
    • And you will feel alive again physically, emotionally, and spiritually knowing that this area that beset you so much is now behind you and never going to return again.


Next Steps


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