Most people with debt want to get out of it quickly and efficiently. To do that, you first need a clear understanding of your financial situation. Second, you need a clear, actionable plan.

In this week’s Money Wisdom Question Series, join Jake Doser, CFP®, CPWA® as he breaks down two key strategies to tackling debt while still protecting your savings.

Steps You Can Take Right Now

First, make sure you have a budget in place. With an understanding of your monthly income and expenses, you can determine how much you’ll have to allocate toward debt. Second, it’s important to have a clear picture of your debt: how much you owe, your interest rates, loan terms, and minimum payments. A good resource to find this information is AnnualCreditReport.com, which provides a free annual credit report from each of the three major bureaus.

Debt Snowball Method

One method for paying off debt is the snowball method, which is all about gaining psychological momentum. You focus on the smallest debt first while continuing to make minimum payments on other debt. Once the smallest debt is paid off, you roll that payment into the next smallest and continue the process. This method helps you see progress quickly, which can be encouraging and motivating.

However, it’s important not to neglect your emergency savings. If you put every extra dollar toward debt without a safety net, you could end up back in debt later.

Debt Avalanche Method

In contrast, the debt avalanche method takes a more mathematical approach. You focus on paying off the debt with the highest interest rate first, regardless of the balance or monthly payment amount. By doing this, you reduce the total interest paid overtime. While this method can save you more money in the long run, it may feel slower as progress isn’t always immediate.

Which Method Is Right for You?

Choosing between these methods depends on your personal circumstances. If quick wins keep you motivated, the snowball method may work better. If you’re more disciplined and focused on saving money over time, the avalanche approach could be a better fit. Be honest with yourself, know your financial habits, and choose the method that you’ll stick with most consistently.