Debt Snowball vs. Avalanche — Which One Actually Works for You? | Coffee with E

Still paying minimums and wondering if you'll ever actually get out? You're not alone and you're not stuck. You just need a plan that actually fits how YOU are wired.

In this clip from our full episode, Dr. Constance Craig-Mason, MRFC®, NSSA® and Laura Pesek, CFP®, CLU, ChFC break down exactly how to start getting out of debt, without the shame, without the overwhelm, and without giving up the things that make life worth living.

⏱ What's Covered in This Clip
✅ Why managing your debt comes before paying it off
✅ Debt snowball vs. avalanche: what's the difference 
✅ How to choose the method that keeps YOU consistent  
✅ Why you should keep credit cards open even after paying them off 
✅ Who this conversation is (and isn't) for 
✅ When to call a debt counseling service instead

💡 Key Takeaways
→ Before you focus on paying off debt, make sure you can manage it — no overdrafts, no missed minimums, money coming in exceeding money going out 
→ Debt snowball = pay off smallest balances first for quick wins and confidence
→ Debt avalanche = pay off highest interest first to save more money long term 
→ The best method is the one you will actually stick to 
→ Paying off a card does NOT mean you should close it — open lines of credit make up 10% of your credit score 
→ This conversation is for people who have the income to pay their debt but need a strategy — if your debt exceeds your income, start with a debt counseling service

💬 Memorable Moments
"Debt-free, debt-free, manage it first."
"You already proved to yourself that you could do it. And you proved to the lender that you could do it."
"Don't go spending more, take that and be like, I did the work and they're incentivizing me by increasing my limits."

🎙 Featured Guests
Dr. Constance Craig-Mason, MRFC®, NSSA® CEO, Concierge Financial Advisory | Founder, Money Talks Movement 
🌐 https://www.conciergefg.com/
https://www.linkedin.com/in/ccraigmason/

Laura Pesek, CFP®, CLU, ChFC Certified Financial Planner & Fiduciary 
🌐 https://rosefinancialassociates.com/
https://www.linkedin.com/in/laura-pesek-cfp%C2%AE-clu-chfc-a8b76517/


📌 Resources
Debt Snowball vs. Avalanche — talk to a certified financial planner to find out which is right for your situation
Need deeper help? Search for a nonprofit debt counseling service in your area

📖 Article recommended by Dr. Craig-Mason: "The Art of Quiet Luxury" → https://vegoutmag.com/lifestyle/gen-bt-the-art-of-quiet-luxury-9-things-genuinely-wealthy-people-invest-in-that-middle-class-families-overlook-completely/

🏡 Work With Erica Looking to buy or sell real estate in Central PA? I'm an Associate Broker at Keller Williams and I'd love to help. 
👉 sellingcentralpahomes.com

🖤 Join the Luxie Community 
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https://podcasts.apple.com/us/podcast/coffee-with-e/id1749880909
📖 Own Your Luxe Without The Guilt — coming soon

If this clip helped you, share it with someone who needs a debt plan that actually works for them. That's how we grow this community.
#CoffeeWithE #OwnYourLuxe #FinancialWholeness #DebtFreeJourney #PersonalFinance

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Transcript

Why Managing Debt Comes First

SPEAKER_00 0:00

And uh let's talk about debt because debt is huge, okay? So, what are some of the ways that we can actually help someone to get out of debt without them feeling like they're stuck or have shame behind it?

Snowball Vs Avalanche Explained

Face The Numbers On Paper

SPEAKER_01 0:12

Well, you mentioned Ramsey. Um, most people will say, Well, what should I do as far as being managed? The debt, I believe debt should be managed first before you just jump out to I'm paying everything off. Because like by manage. Manage the debt, right? So if you have mortgage, you've got a car, you've got some cards, whatever. You have to be able to manage that load as a part of that spending plan. So it's not just the utilities and the food, it's also the minimal debt payments. So collectively, yeah, do you have enough money coming in to handle all of that and also have some joy? If you can do all of that, eventually you will pay it off. But like you mentioned about having a system and being able to um build a new habit, right? So people go, I want to get, I want to be debt free. We hear that all the time. Debt free, debt free. Manage it first. Know that I I bring in X amount, this is what goes out of the door, and it's managed well. And how do you know that? Because you don't have insufficients, you don't have overdraft fees, you're managing your resources well. That's how you know if you're managing well. Okay. Yes, you can choose the debt snowball or the avalanche. And for those who don't know, it's really are you going to pay off the highest interest cards first or are you gonna pay off the lower balance cards first? I always tell clients who are focusing on that, it's what's gonna keep you consistent and happy. So if you're someone who needs more instant gratification, then maybe you pick to pay off the cards with the smaller balances first because you can see, oh, my balance was$200. And instead of dragging that out for 24 months, I paid it off in 30 or 60 days. And now, hooray, hooray, hooray, you build your confidence that you could do this. I could literally get out of debt if I want to. So if you're someone who doesn't look at things like, oh, the long haul, I need short, gratifying moments, then you start that way. So that winning mass. You build it up because with all of us, we need to know that we can do it. So if you're someone who needs to see, oh, in six months I paid off two small cards, hooray. Now take that money and apply to the next cards that have higher limits. So it might take a little bit longer, but you already proved to yourself that you could do it and you prove to the lender that you could do it, right? And so what's the lender gonna do? Try to increase your limit because you did the right thing, and they're like, Oh, your card is now 750 instead of 500. Don't go spending or take that clap on the back, take that and be like, I did the work, and they're incentivizing me by increasing my limits. So when I say manage it first, get to know that you can do it, and then you can continue to I would add to that too.

Credit Cards And Credit Score Myths

SPEAKER_02 3:04

I would I would agree with that philosophy. I I think that the number one step is that you do need to look at what you have. If you don't know how much in debt you are, right, you're never going to know open up the envelope. Yes, how about that? Yes. Take a look and write it down. Yeah, how much do I really have? What are the minimum payments on each of these? What is that? Really spell it all out. And you're right. Do I have enough coming in? And then I would absolutely agree with you because I've told people this thing, start with the smallest one first because then you'll feel like you're taking those forward steps. It's very, very hard when you keep seeing that those balances are going down very slow. You get right a little impatient. So I would say get those and then cut them off, right? You don't need them, you don't need to open up the store credit cards anymore or the incentives. You're gonna just make this a focus, get rid of them because it will help their credit score too. If you have multiple lines of credit open, you're gonna want to close those cards because as they raise those limits, that will affect your credit score then too. Because oh, it's hurt.

SPEAKER_00 4:18

Is that not a thing anymore? Because so by closing them, it's gonna hurt your credit.

SPEAKER_01 4:23

Yeah, you you would want to keep your relationships open with those creditors, even if you pay it down to zero. All right, okay. Closing them, you will lose points on your score for closing the relationship because that is actually part of the the pie character that you have the open lines, right? Okay, but to your point, you don't have to spend it just because you have it, you know what I mean? If you have the account, because I remember back in the day, right? American Eagle used to be really popular for a lot of people to go and buy their clothes and do other things. And my kids actually told me they was like, we don't shop at American Eagle anymore. Well, we used to have American Eagle charge cards, right? When I was back in my later days, so you know, and so we would go up to American Eagle and buy stuff and pay it off and buy some pay it off. And they're like, we don't wear those shirts anymore. So I would not go lose points on my credit because they didn't want to shop at a bird or eagle. So I still had the line open, but we just weren't using the card anymore, right? So you it's 10% of your credit scores having these open lines, right? So um, but to your point, some people they see these these open lines of credit and they're just like, oh, I can go and charge up some more, right?

SPEAKER_00 5:28

So it's being responsible. If you're not responsible, then close the your card. Yeah, then I mean it'd probably take a couple uh months before it actually, I guess, heals your credit would heal. Right. But it's better than if you're you know um enticing yourself to want to spend something kind of fakes must like closing the credit card does affect it in some way.

When You Need Debt Counseling

SPEAKER_02 5:47

You're right. Yeah, I kind of forgot about that. Yeah, um, I just remember like seeing that like if your limits are high, even though you maybe don't have valences on them all, you know, having having the ability to charge more does affect uh credit.

Full Episode And Subscribe

SPEAKER_00 6:01

Yeah, self-controlled and it's so in the conversation that we're having, I always like to make this um very clear the conversation we're having is someone that actually has the ability to pay off their debt, right? They just made bad financial decisions. Okay. There are some that just um are in a position where they can no longer pay their debt, they don't have enough money at the end of the month, they have more debt than they have money that comes in, you know. So let's just say you owe$2,500, you're only bringing in a thousand, right? That's very dramatic. So then there's other things that people should be looking at, other ways um to resolve the issues that they're in. So that's not the conversation. We're not the people or the uh the episode you should be looking at. You probably should be talking to a debt counseling service, right? Um, so they can actually help you overcome your um your challenge. So the people we're talking to today is okay, well, we decided to to run up some credit cards here. You know, we may have um, you know, 2,500, but I'm bringing in$5,000, right? So those are the people that, yeah, we're saying, hey, guess, guess what? You need to pick between a snowball effect or avalanche method, right? Um, and then whatever one works, just stick with it. Right. Yeah, that's who we're talking to. Right. Yeah. Yeah. Um plan, get a plan. Get a plan, yeah. So what do you think? I hope you enjoyed that full clip. We have the full episode right here. And did you know I am an associate broker at Kelly Williams and I have a real estate team. We sell help people buy and sell real estate all throughout Central PA, and we would love to help you. That's how we're able to fund this channel. So do me a favor, go click on here so you can watch the full episode. And then by the way, subscribe. We would love to have you.