If you’re struggling with debt, you’re not alone. Millions of people face the stress and frustration of multiple loans, credit cards, and interest payments. Thankfully, there are proven methods to tackle your debt faster, making your journey to financial freedom a whole lot smoother. Two of the most popular approaches are the Debt Snowball and the Debt Avalanche methods.
You might’ve heard about them, but if you’re wondering which one is right for you, let’s dive in, break them down, and figure out which strategy can help you kick debt to the curb once and for all!
In This Page
1. What Is the Debt Snowball Method?
The Debt Snowball method, made popular by financial guru Dave Ramsey, focuses on paying off your debts in order from smallest to largest balance, regardless of the interest rate.
Here’s how it works:
- Step 1: List all your debts from the smallest balance to the largest, ignoring interest rates.
- Step 2: Make minimum payments on all your debts, but put extra money toward the smallest debt.
- Step 3: Once the smallest debt is paid off, roll the payment you were making on that debt into the next smallest one. Keep repeating this until you’re debt-free.
The Good
The snowball method is all about momentum and quick wins. By paying off smaller debts first, you get psychological victories early on. Each debt you eliminate motivates you to keep going. It’s like a morale boost that makes tackling debt feel less overwhelming.
The Not-So-Good
Since the snowball method doesn’t prioritize interest rates, you might end up paying more interest in the long run, especially if your larger debts have high interest rates.
2. What Is the Debt Avalanche Method?
The Debt Avalanche method takes a different approach, aiming to save you the most money on interest. Instead of starting with the smallest debt, you start with the one that has the highest interest rate, regardless of the balance.
Here’s how it works:
- Step 1: List your debts from highest interest rate to lowest.
- Step 2: Pay minimums on all debts, but put extra cash toward the debt with the highest interest rate first.
- Step 3: Once the highest-interest debt is gone, move on to the next highest, and continue this until you’re debt-free.
The Good
The avalanche method saves you the most money on interest payments over time. By targeting high-interest debt first, you pay off the most expensive debts sooner. It’s the financially smartest approach, especially if you’re dealing with high-interest credit cards or payday loans.
The Not-So-Good
The downside is that your highest-interest debt might also be one of your largest, meaning it could take a long time to pay off. This can feel discouraging and make it harder to stick with the plan without quick wins to celebrate along the way.
3. Debt Snowball vs. Debt Avalanche: Which Saves More Money?
If you crunch the numbers, the avalanche method generally saves you more money in interest overall. By focusing on the highest interest debts first, you minimize the amount of interest that compounds over time. This can mean saving hundreds or even thousands of dollars, depending on how much debt you have.
But here’s the catch: while the avalanche method saves you money, it requires discipline and patience because it can take longer to see progress. If you find it hard to stay motivated without quick victories, the snowball method might actually work better for you, even if it costs a little more in interest.
4. Debt Snowball vs. Debt Avalanche: Which Is Faster?
In terms of pure speed, both methods will ultimately get you debt-free—provided you stick to the plan. But in practice, the snowball method often feels faster because you eliminate debts more frequently, which builds momentum. It’s a psychological boost that helps keep you on track.
The avalanche method, on the other hand, may feel slower because you might spend months or years paying off a single large, high-interest debt before seeing any debts completely gone. It’s mathematically faster overall, but it can feel slower emotionally, which is important to consider.
5. How Do You Choose?
Choosing between the Debt Snowball and Debt Avalanche methods boils down to knowing yourself and understanding what motivates you.
- Choose Debt Snowball if:
- You thrive on quick wins and need motivation to keep going.
- Emotional satisfaction and momentum matter more to you than saving every possible dollar.
- You have many small debts and feel overwhelmed.
- Choose Debt Avalanche if:
- You’re driven by logic and numbers.
- Saving money on interest is your top priority.
- You’re disciplined enough to stay focused even if results aren’t immediate.
6. Can You Combine Both Methods?
Absolutely! You can create your own hybrid method that gives you both the psychological boost of the snowball method and the cost-saving benefits of the avalanche. For instance, start with a small debt for a quick win, then switch to targeting the highest-interest debt. This way, you get an initial burst of motivation and then focus on saving the most money.
7. Additional Tips for Debt Repayment Success
No matter which method you choose, here are a few extra tips to accelerate your progress:
- Create a budget: Track your spending, cut unnecessary expenses, and allocate more money toward debt payments.
- Increase your income: Consider side hustles or part-time work to generate extra cash.
- Negotiate lower rates: Call your creditors to negotiate lower interest rates, saving you money no matter which method you pick.
- Avoid new debt: Cut up those credit cards or stash them away—adding more debt only complicates your journey.
The Bottom Line
When it comes to the Debt Snowball versus Debt Avalanche debate, the best method is the one you’ll actually stick with. If you need motivation, quick wins, and momentum, choose the snowball. If you’re numbers-oriented, disciplined, and patient, the avalanche can save you more money.
The key is to pick a method, commit to it, and stick with it. Consistency is more important than strategy. So find the approach that feels right to you, and you’ll be celebrating your debt-free milestone sooner than you think!
