Debt Payoff Methods: Snowball vs. Avalanche
Which One Is Right for You?
Paying off debt can feel overwhelming, especially when you have multiple balances across credit cards, student loans, or personal loans. I know it all too well, as many other young people do. When you’re in debt, it is important not to panic, and make plans to pay it off as soon as you possible can. It will help you make sense of it and prepare the next steps in order to get rid of it all. That’s why choosing the right debt payoff strategy can help you stay on track and make steady progress toward financial freedom.
Two of the most popular repayment methods are the Snowball and Avalanche methods. Each has its own advantages, and the best choice depends on your financial situation and motivation.
In this guide, I’ll break down how both methods work, their pros and cons, and how to decide which one fits your needs.
Understanding the Debt Snowball Method
The Snowball Method, made famous by financial expert Dave Ramsey, focuses on building momentum with quick wins. It works by prioritizing smallest debts first, regardless of interest rates.
How the Snowball Method Works
List all your debts from smallest to largest (ignore interest rates for now).
Make the minimum payment on all debts except the smallest one.
Put all extra money toward the smallest debt until it’s completely paid off.
Once that debt is gone, roll its payment into the next smallest debt.
Repeat this process until all your debts are paid off.
Example of the Snowball Method
Let’s say you have the following debts:
Credit Card A – $500 balance (18% interest)
Medical Bill – $1,500 balance (0% interest)
Student Loan – $5,000 balance (6% interest)
Car Loan – $10,000 balance (4% interest)
Using the Snowball Method, you would:
Pay off Credit Card A first (smallest balance).
Then tackle the Medical Bill.
Then move on to the Student Loan.
Finally, pay off the Car Loan.
The focus is on eliminating small debts quickly, which creates a psychological boost that keeps you motivated.
Pros of the Snowball Method
Quick wins keep you motivated and engaged.
Psychologically rewarding, making it easier to stick with.
Simple and easy to follow, even if you don’t love math.
Cons of the Snowball Method
Can cost more in interest since it ignores rates.
Takes longer to pay off high-interest debt, which could slow down your overall progress.
Understanding the Debt Avalanche Method
The Avalanche Method is more mathematically efficient because it prioritizes paying off high-interest debt first, saving you money over time.
How the Avalanche Method Works
List all your debts from highest to lowest interest rate.
Make the minimum payment on all debts except the one with the highest interest.
Put all extra money toward the debt with the highest interest rate until it’s paid off.
Once that debt is gone, roll its payment into the next highest-interest debt.
Repeat the process until you’re debt-free.
Example of the Avalanche Method
Using the same debts from earlier, you’d pay them off in this order based on interest rates:
Credit Card A – 18% interest ($500 balance)
Student Loan – 6% interest ($5,000 balance)
Car Loan – 4% interest ($10,000 balance)
Medical Bill – 0% interest ($1,500 balance)
Since Credit Card A has the highest interest rate, you tackle it first, even though it’s a small debt. Once it’s gone, you focus on the Student Loan, then the Car Loan, and finally, the Medical Bill.
This method saves you the most money in the long run because high-interest debt disappears faster.
Pros of the Avalanche Method
Saves the most money by reducing total interest paid.
More financially efficient and gets you out of debt faster.
Best for people focused on long-term savings.
Cons of the Avalanche Method
Can feel slow at first, especially if your highest-interest debt has a large balance.
Requires patience and discipline, since early progress may be less visible.
Snowball vs. Avalanche: Which One Should You Choose?
Both methods work, but the best one depends on your personality, motivation, and financial situation.
Use the Snowball Method if:
You need quick wins to stay motivated.
You struggle with discipline when it comes to money.
You want a simple system that’s easy to follow.
Use the Avalanche Method if:
You want to save the most money and pay off debt faster.
You can stay disciplined even if progress feels slow at first.
You have high-interest debt that’s costing you a lot.
What If You Can’t Decide? Try a Hybrid Approach
If you’re torn between the two, consider a hybrid approach:
Start with the Snowball Method for small debts to build momentum.
Once those are gone, switch to the Avalanche Method to tackle high-interest debt.
This way, you get the best of both worlds—early motivation and long-term savings.
Tips to Speed Up Debt Repayment
Regardless of which method you choose, here are some ways to pay off debt faster:
Increase Your Income – Consider side gigs, selling items, or freelancing to put extra money toward debt.
Cut Unnecessary Expenses – Reduce subscriptions, dining out, and impulse spending.
Make Biweekly Payments – This can help reduce interest and speed up repayment.
Use Windfalls Wisely – Put tax refunds, bonuses, or gifts toward debt instead of spending them.
Negotiate Lower Interest Rates – Call creditors to request lower rates or transfer balances to lower-interest cards.
Final Thoughts: The Best Debt Payoff Strategy Is… The One You Stick With
Both the Snowball and Avalanche methods can help you get out of debt—it all depends on your financial priorities.
If you need motivation and momentum, go with the Snowball Method. If you want to save the most money and time, choose the Avalanche Method.
No matter which strategy you pick, the key is to stay consistent, avoid taking on new debt, and keep pushing forward.
