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This little piggy needs a refill.<\/p>\n
\u00a9 New Africa\/stock.adobe.com, \u00a9 diy13\/stock.adobe.com; Photo illustration Encyclop\u00e6dia Britannica, Inc.<\/p>\n
[Editor\u2019s note: This article first appeared in Money Matters, a weekly newsletter from Britannica Money. Each issue focuses on one timely financial topic, presented in clear, practical context. Want to subscribe? Start here.<\/a>]<\/p>\n By February, the holidays are long gone, but for many of us, the bill is still very much here.<\/p>\n The season that just wrapped up was a big one. According to the National Retail Federation, U.S. holiday retail sales topped $1 trillion for the first time, with consumers having spent about $890 per person on holiday-related purchases.<\/p>\n What follows the holidays is quieter\u2014and familiar. Balances linger. Statements arrive. And at some point, the question stops being\u00a0whether\u00a0to pay down debt and becomes much more practical:\u00a0Where do I start?Two classic strategies offer very different answers: the\u00a0snowball\u00a0and the\u00a0avalanche.<\/p>\n Snowball vs. avalanche: Two ways to start moving<\/p>\n First things first: with\u00a0any\u00a0debt strategy, you keep making every\u00a0required payment\u2014mortgage<\/a>,\u00a0auto loan<\/a>,\u00a0student debt<\/a>, and so on. Strategies such as the snowball or avalanche only apply to how you use the\u00a0extra\u00a0money.<\/p>\n Let\u2019s put some real numbers on it. Say you\u2019re carrying four debts:<\/p>\n $1,100, at 20% interest, on your department store credit card$2,300 at 26% interest, on a\u00a0Mastercard rewards card<\/a>\u00a0(your main card for monthly purchases)$8,000 left on your auto loan, at 6%$400 that you borrowed, interest free, from your sister in order to buy gifts<\/p>\n With the snowball method, you put your extra money toward the smallest balance\u2014the loan from your sister.\u00a0(Interest saved? Zero. Family harmony? Priceless.)\u00a0Once her debt is paid off, you roll that payment into the next-smallest balance\u2014the department store card\u2014and repeat until they\u2019re all paid off. The snowball method isn\u2019t about efficiency; it\u2019s about momentum. One balance gone means fewer bills, fewer due dates, and visible progress early on.<\/p>\n 17%<\/p>\n Share of consumers who expect it will take\u00a0more than six months\u00a0to pay off holiday spending on credit cards, according to a survey conducted for the AICPA.<\/p>\n