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7 Debt-Reduction Strategies – Which One Works Best for You?

Priority APR Bal Pmt
APR
H-Pmt H-Bal Quick L-Bal L-Pmt
MasterCard 19.80 1,705 49 200 483 483 485 406 395
Visa 15.90 2,341 73 454 446 446 447 525 523
Discover 12.90 1,250 27 253 255 255 254 117 78
Auto Loan 7.90 5,843 315 409 309 309 335 409 409
Mom & Dad 0.00 750 50 0 0 0 0 0 0
Total Interest Paid 1,316 1,493 1,493 1,521 1,457 1,405

Debt Stacking (Avalanche) vs Snowball

When it comes to systematically paying off debt, you have a choice between two established strategies: debt stacking, sometimes called the avalanche method, or the debt snowball. Both methods have their benefits and variations. It’s up to you to decide which strategy works best for you. Once you select a strategy, ZilchWorks Standard debt-reduction software can tell you exactly which bills to pay when, and lead you step-by-step towards a debt-free life.

With a debt stacking strategy you pay off debts one at a time by focusing on the debt with the highest interest rate first. However, you can also choose highest payment first or highest balance first. In either case debt stacking proceeds from highest to lowest.

On the other hand, a debt snowball strategy works by paying off your debts with the smallest balance first and working your way up to larger debts. Then again, you have additional options such as lowest balance first or quick elimination. In any case debt snowball progresses from smallest to largest.

To demonstrate for you how each aproach stacks up, we've run some numbers. Suppose you have three credit cards and two loans as listed below:

  1. A MasterCard card with a $1,700 balance at 19.80%
  2. A Visa card with a $2,341 balance at 15.90%
  3. A Discover card with a $1,250 balance at 12.90%
  4. An Auto Loan with a $5,843 balance at 7.90%
  5. A loan from Mom & Dad with a $750 balance at no interest

In addtion, you also have an extra $100 a month which will accelerate paying off your balances.

1. Annual Percentage Rate (APR)

Under this strategy you pay back the creditor that charges you the highest annual percentage rate first, while paying the minimum monthly payments to other creditors. Once you’ve crushed the worst offender, you move on to the creditor with the next highest rate. All the payments that were going to your first priority shift to priority number two.

This strategy gives you the best bang for your buck.

Priority APR Bal Pmt
APR
H-Pmt H-Bal Quick L-Bal L-Pmt
MasterCard 19.80 1,705 49 200 483 483 485 406 395
Visa 15.90 2,341 73 454 446 446 447 525 523
Discover 12.90 1,250 27 253 255 255 254 117 78
Auto Loan 7.90 5,843 315 409 309 309 335 409 409
Mom & Dad 0.00 750 50 0 0 0 0 0 0
Total Interest Paid 1,316 1,493 1,493 1,521 1,457 1,405

2. Highest Payment (H-Pmt)

Your debt with the highest monthly payment may be most critical to you. After all, this could be your automobile, a large investment and your only means of transportation to and from work. Select this strategy to prioritize your debts with the highest monthly payments and protect what’s most important to you.

Priority APR Bal Pmt APR
H-Pmt
H-Bal Quick L-Bal L-Pmt
Auto Loan 7.90 5,843 315 409 309 309 335 409 409
Visa 15.90 2,341 73 454 446 446 447 525 523
Mom & Dad 0.00 750 50 0 0 0 0 0 0
MasterCard 19.80 1,705 49 200 483 483 485 406 395
Discover 12.90 1,250 27 253 255 255 254 117 78
Total Interest Paid 1,316 1,493 1,493 1,521 1,457 1,405

3. Highest Bal (H-Bal)

If you have one or two large debts that loom so large that tackling them feels like climbing Mount Everest, you need to start to whittle these debts down and see some success. Prioritize your debts with the highest balance first and watch that towering debt melt away.

Priority APR Bal Pmt APR H-Pmt
H-Bal
Quick L-Bal L-Pmt
Auto Loan 7.90 5,843 315 409 309 309 335 409 409
Visa 15.90 2,341 73 454 446 446 447 525 523
MasterCard 19.80 1,705 49 200 483 483 485 406 395
Discover 12.90 1,250 27 253 255 255 254 117 78
Mom & Dad 0.00 750 50 0 0 0 0 0 0
Total Interest Paid 1,316 1,493 1,493 1,521 1,457 1,405

4. Quick Elimination (Quick)

Perhaps you’re just tired of receiving a huge stack of bills. A few “paid in full” notices to celebrate could be the ticket to keep you motivated on your quest for debt elimination.

If so, you need the Quick Elimination debt-reduction strategy which makes the debts that are easiest to pay off your top priority. The debt with the lowest number of payments remaining comes first. If you have two debts rivaling for this position, it prioritizes the one with the higher monthly payment.

The Quick Elimination strategy may cost a little more than the Annual Percentage Rate strategy, but if it helps you stick with the program, it’s worth it.

Priority APR Bal Pmt APR H-Pmt H-Bal
Quick
L-Bal L-Pmt
Mom & Dad 0.00 750 50 0 0 0 0 0 0
Auto Loan 7.90 5,843 315 409 309 309 335 409 409
Visa 15.90 2,341 73 454 446 446 447 525 523
MasterCard 19.80 1,705 49 200 483 483 485 406 395
Discover 12.90 1,250 27 253 255 255 254 117 78
Total Interest Paid 1,316 1,493 1,493 1,521 1,457 1,405

5. Low Balance (L-Bal)

The Lowest Balance First debt-reduction strategy has a subtle difference from the Quick-Elimination strategy. It prioritizes your debts based on which one has the lowest balance. Wipe away those nagging little debts and then focus full force on the big boys. After all, research shows people who pay off the smallest debts first are most successful with debt reduction.

Priority APR Bal Pmt APR H-Pmt H-Bal Quick
L-Bal
L-Pmt
Mom & Dad 0.00 750 50 0 0 0 0 0 0
Discover 12.90 1,250 27 253 255 255 254 117 78
MasterCard 19.80 1,705 49 200 483 483 485 406 395
Visa 15.90 2,341 73 454 446 446 447 525 523
Auto Loan 7.90 5,843 315 409 309 309 335 409 409
Total Interest Paid 1,316 1,493 1,493 1,521 1,457 1,405

6. Low Payment (L-Pmt)

Tired of multiple creditors hounding you for money? Use the lowest-payment-first debt-reduction strategy. It’s assures you keep the greatest number of creditors off your back even in the most difficult financial times. This strategy puts your lowest monthly payments first.

Priority APR Bal Pmt APR H-Pmt H-Bal Quick L-Bal
L-Pmt
Discover 12.90 1,250 27 253 255 255 254 117 78
MasterCard 19.80 1,705 49 200 483 483 485 406 395
Mom & Dad 0.00 750 50 0 0 0 0 0 0
Visa 15.90 2,341 73 454 446 446 447 525 523
Auto Loan 7.90 5,843 315 409 309 309 335 409 409
Total Interest Paid 1,316 1,493 1,493 1,521 1,457 1,405

7. Custom: APR But With Mom & Dad First

Perhaps you see facets of various debt-reduction strategies you want to combine. For example, your Mom & Dad might come first, but you also want to take advantage of paying highest interest rates. Then custom-select which debt you pay first and fine-tune your plan.

Priority APR Bal Pmt APR
Custom
Mom & Dad 0.00 750 50 0 0
MasterCard 19.80 1,705 49 200 268
Visa 15.90 2,341 73 454 461
Discover 12.90 1,250 27 253 255
Auto Loan 7.90 5,843 315 409 309
Total Interest Paid 1,316 1,391

How to Implement Your Debt-Reduction Strategy

Whichever debt-reduction strategy you choose, there are a lot of moving parts. But you can make it amazingly simple and stay in control by using ZilchWorks Standard debt-reduction software to manage your debt-reduction plan. Just fill in the blanks, specify what you can afford each month and your preferred strategy, and press the button to create your plan. Find out exactly how much to pay each creditor each month…and when your debt will vanish.

Follow the plan and watch your debt shrink away. Our customers pay 50 to 60% less in interest penalties and get out of debt 55 to 65% faster! You’ll be debt-free quicker than you ever thought possible. And you don’t have to confide in anyone about your financial woes. There’s no credit counseling needed, and you can do it all from the privacy of your home.

Order your ZilchWorks Standard debt-reduction software now and get on the path to debt-free living.

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LOL Financial Services
Plantersville, Texas

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ZilchWorks helps people get out of debt. We have been teaching the payment snowball method for elliminating debt since 1990. Our most popular product, Credit Card Math™, is chock full of timeless, financial information. Credit Card Math™ first appeared in 1994 and continues to receive thousands of downloads from all over the world. Our Zilch Standard™ product is an easy to use, low cost solution that creates do-it-yourself debt management plans. Zilch Standard™ takes advantage of trade secrets used by many expert financial counselors. Our customers get out of debt 55% - 65% faster. ZilchWorks is owned and operated by Michael J. Riley, a retired United States Marine Corps Gunnery Sergeant.
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