Avalanche or Snowball: The Debate on How to Pay Off Debt

Trying to pay off your debts without a plan can feel like trying to bail out a sinking ship with a small bucket. After a while, you’ll come to realize you’re making little to no progress, and slipping ever deeper into the danger zone. While there’s no single correct way to pay off debt, having a plan can help you set goals and accomplish them systematically.

Let’s take a closer look at the finer points of two leading do-it-yourself debt repayment techniques — the debt avalanche and the debt snowball.


Debt Snowball: Smallest Balance to Largest

Personal finance expert Dave Ramsey popularized the snowball technique, which goes like this:

  1. List your debts in order from the smallest balance to the largest one.
  2. Rather than paying as much as you can afford on each one, remit the minimum payment on all but the smallest one.
  3. Use the rest of the money to pay that one each month until it is paid off.
  4. Once that one is satisfied, add the amount you were paying on it to the minimum payment you were making on the next smallest one and repeat the process.
  5. Continue doing so with each additional obligation until all of them are paid off.


When you reach the largest debt, all of the money you would otherwise have been putting toward minimum payments (and making minimal headway) each month can instead be applied to just that one. This will get you out of debt sooner than will making minimum payments on all of your accounts each month.

As NerdWallet writes, the main benefit of snowballing multiple debts is that “a system front-loaded with rewards can help keep you on track.” Consider how much more manageable it feels to work on your smallest debt than it does to try to address all your debts at once. Snowballing enables you to rack up a relatively quick victory by paying off that first balance. The feelings of relief and accomplishment you’ll get will motivate you to keep going until every penny is repaid.


Debt Avalanche: Highest Interest Rate to Lowest

The debt avalanche method, on the other hand, aims to minimize how much you’ll pay in interest. This strategy orders your debts from the one with the highest interest rate to the lowest. Other than that, you’ll proceed the same way you would with the snowball approach.

The goal of avalanching your debt is to pay the least amount of interest possible. This method can be especially fruitful when you’re dealing with several high-interest credit card balances — especially given the compounding nature of interest.


Consider the Pros and Cons

When you’re considering how to pay off debt, snowballing can provide a much-needed psychological boost, as you’ll see your results gaining momentum like a snowball rolling down a hill. The downside is you could end up paying more because you’re prioritizing the balance due over the interest charged.

The upside of debt avalanching is you’ll tackle your debts while paying the least amount of interest possible. The challenge with this strategy is you will have to stay disciplined because the victories may not come as quickly — especially if you’re facing a high-interest debt with a large balance right off the bat.

The avalanche and snowball methods of debt repayment represent just two of the possible ways to go about addressing your debts. And, truth be told, they’re typically only viable options for people with enough money — after covering for essential living expenses and saving — to pay more than the minimum balance due on at least one account.

However, if you are able to pursue this do-it-yourself route for debt repayment, it’s important to decide which strategy you’ll use ahead of time. Taking a systematic approach, whether snowball or avalanche, will help you stay focused and make real progress on getting out of debt. 

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