See Both Methods with Your Actual Debt
Compare payoff timelines and total interest for your situation
You've decided to get serious about paying off debt—congratulations! That decision alone puts you ahead of most people. But now comes the question: What's the best strategy to eliminate your debt?
Two methods dominate the conversation: the Debt Snowball (popularized by Dave Ramsey) and the Debt Avalanche (the mathematically optimal approach). Both work. Both will get you debt-free. But they take different paths to get there.
Quick Overview
Debt Snowball
Pay off debts from smallest balance to largest, regardless of interest rate.
Debt Avalanche
Pay off debts from highest interest rate to lowest, regardless of balance.
Debt Snowball Method
The Debt Snowball was popularized by personal finance expert Dave Ramsey. The core principle: pay off your smallest debt first to build momentum, like a snowball rolling downhill and getting bigger.
How the Snowball Works
- 1List all debts from smallest balance to largest (ignore interest rates)
- 2Make minimum payments on all debts except the smallest
- 3Throw all extra money at the smallest debt until it's paid off
- 4Roll that payment (minimum + extra) to the next smallest debt
- 5Repeat until all debts are eliminated
Snowball Example
Let's say you have an extra $500/month to put toward debt:
| Debt | Balance | APR | Min Payment | Order |
|---|---|---|---|---|
| Medical Bill | $800 | 0% | $50 | 1st ← Attack! |
| Store Credit Card | $2,500 | 24% | $75 | 2nd |
| Credit Card | $5,000 | 18% | $100 | 3rd |
| Car Loan | $12,000 | 6% | $350 | 4th |
With Snowball, you'd attack the $800 medical bill first with $500 + $50 = $550/month. It's paid off in less than 2 months! That quick win feels amazing and motivates you to keep going.
The Psychology: Research from Harvard Business Review found that people who paid off small debts first were more likely to eliminate ALL their debt. The quick wins create momentum that keeps you going.
Debt Avalanche Method
The Debt Avalanche is the mathematically optimal approach: target the highest interest rate first to minimize the total interest you pay. Every dollar saves the maximum possible interest.
How the Avalanche Works
- 1List all debts from highest interest rate to lowest (ignore balances)
- 2Make minimum payments on all debts except the highest-rate one
- 3Throw all extra money at the highest-interest debt until it's paid off
- 4Roll that payment to the next highest-interest debt
- 5Repeat until debt-free
Avalanche Example (Same Debts)
| Debt | Balance | APR | Min Payment | Order |
|---|---|---|---|---|
| Store Credit Card | $2,500 | 24% | $75 | 1st ← Attack! |
| Credit Card | $5,000 | 18% | $100 | 2nd |
| Car Loan | $12,000 | 6% | $350 | 3rd |
| Medical Bill | $800 | 0% | $50 | 4th (last!) |
With Avalanche, you'd attack the 24% store card first with $500 + $75 = $575/month. It takes about 5 months—longer than the medical bill—but you're stopping the most expensive debt from growing.
The Math: Every extra dollar paid toward a 24% debt saves $0.24/year in interest. That same dollar toward a 0% debt saves... $0. The avalanche maximizes the value of every payment.
Head-to-Head Comparison
Let's run both methods with our example debt ($20,300 total) and $1,075/month total payment ($575 minimum + $500 extra):
Snowball Results
Avalanche Results
Avalanche saves $358 and pays off debt 1 month faster
When the Difference Is Bigger
The savings gap increases when you have:
- •Larger high-interest balances
- •Bigger spread between your highest and lowest rates
- •Longer payoff timeline
In some cases, Avalanche can save thousands of dollars. In others, the difference is minimal.
Compare Both Methods with Your Actual Debt
Our calculator shows you the exact difference for your situation.
Calculate My Debt PayoffWhich Method Is Best for YOU?
The best method is the one you'll actually stick with. A mathematically perfect plan you abandon is worse than an imperfect plan you complete.
Choose Snowball If:
- You need motivation and quick wins to stay on track
- You've struggled with debt payoff attempts before
- Your interest rates are fairly similar across debts
- You're feeling overwhelmed and need simplicity
- The interest savings of Avalanche are minimal
Choose Avalanche If:
- You're motivated by math and seeing interest savings
- You have discipline and don't need quick wins
- You have a large high-interest balance (like credit cards)
- There's a big spread between your highest and lowest rates
- You want to minimize total interest paid
Pro Tip: If the difference between methods is less than $500, choose Snowball for the motivation. If it's thousands of dollars, consider Avalanche—but only if you can stay committed.
The Hybrid Approach
Can't decide? You can combine both methods strategically:
Hybrid Strategy Options
Quick Win Then Avalanche
Pay off your smallest debt first for a motivational boost, then switch to the Avalanche method for the rest.
Avalanche With Exceptions
Follow Avalanche, but if any small debt can be paid off with one month's extra payment, knock it out for the win.
Emotional Debt Priority
Use Avalanche, but prioritize any debt causing emotional stress (family loans, specific creditors) regardless of rate.
Tips for Both Methods
📱 Automate Everything
Set up automatic payments so you never miss a minimum payment (or get charged late fees).
🛑 Stop Adding Debt
Neither method works if you keep adding new debt. Cut up credit cards or freeze them if needed.
💵 Build a Mini Emergency Fund First
Save $1,000 before aggressive debt payoff so you don't go back into debt for emergencies. See our Emergency Fund Guide.
📊 Track Your Progress
Update a spreadsheet or use our Debt Tracker to visualize progress. Seeing the numbers shrink is motivating!
🎯 Find Extra Money
Every extra dollar accelerates both methods. Cut expenses, sell stuff, or pick up side income. Use our Budget Planner.
🎉 Celebrate Wins
Each paid-off debt is an achievement. Celebrate (affordably!) to maintain momentum.
Key Takeaways
- Snowball = smallest balance first for motivation and quick wins.
- Avalanche = highest interest first to save the most money.
- Both methods work—the best one is the one you'll actually stick with.
- Use our calculator to see the exact difference for your specific debts.
- Consider a hybrid approach if you need both motivation and optimization.
Related Resources
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