Snowball vs. Avalanche: Which Debt Payoff Method Rocks Harder?

Debt Avalanche vs. Debt Snowball

Let’s start with the two heavyweights in the debt paydown arena. Both methods work, but they approach the problem from different psychological angles.

The Debt Avalanche Method: The Math Genius

The debt avalanche method focuses on the math. With this method, the math makes sense, you’ll save as much money as you can that would be paying in interest.

First, we start by listing all your debts in order of interest rate, from highest to lowest. Then, while making minimum payments on everything, throw every extra dollar you have in your budget at the highest-interest debt. This approach saves you the most money mathematically because you’re tackling the most expensive debt first.

For example, let’s say Sarah had the following debt:

• A credit card at 22% APR ($5,000)

• A personal loan at 12% APR ($10,000)

• Student loans at 6% APR ($15,000)

By focusing on the credit card with the crazy high interest rate first, she will have saved over $2,000 in interest compared to other methods we’ll talk about. The avalanche method isn’t just about numbers; some say it’s about working smarter, not harder.

The Debt Snowball Method: The Psychological Winner

Dave Ramsey popularized this approach, and I’ve seen it work very well for people who need quick wins to stay motivated. I’ve used this method when I began my personal finance journey as well! So here’s the idea:

We list all your debts from smallest balance to largest, regardless of interest rates. Again we are paying attention to the balances! We then pay the minimum on everything except the smallest debt, which gets every extra penny we have in our budget until it’s gone. Then, once that smallest get is paid off, we roll that payment into the next smallest debt. And so on, and so on.

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