Staring at a pile of bills each month? Credit card statements, car payments, student loans, payday loans – it adds up fast. When you’ve got debt spread across multiple accounts, it’s tough to know where to focus your energy.
Throwing extra money at random debts won’t get you very far – you need a debt repayment strategy. Two popular approaches have helped thousands of people tackle their debt: the avalanche method and the snowball method.
These aren’t complicated financial tricks or get-rich-quick schemes. They’re straightforward approaches to get out of debt with different philosophies. Both work, but one might be a better fit for how your brain works and what motivates you.
Paying off Debt with Debt Avalanche vs Debt Snowball: At a Glance
| Debt Avalanche Method | Debt Snowball Method | |
| Focus | Highest interest rate first | Smallest debt first |
| Money Saved | More (less interest paid overall) | Less (more interest paid overall) |
| Motivation | Logic-driven & math-focused | Quick wins for a psychological boost |
| Timeline | Slower initial progress | Faster initial progress |
| Best For | Disciplined savers who stay motivated by numbers | People who need to see results quickly |
| Difficulty | Needs patience and discipline | Easier to stick with long-term |
How does the Debt Avalanche Method work?
The debt avalanche method is all about math. You tackle your debts in order of interest rate, starting with the highest and working your way down. It’s called an “avalanche” because you’re building momentum as you eliminate the most expensive debts first.
Make minimum payments on all your debts, then throw any extra money at the debt with the highest interest rate. Once that’s gone, you move to the next highest rate, and so on.
How to Use the Debt Avalanche Method
- List all your debts with their interest rates
- Arrange them from highest to lowest interest rate
- Pay the minimum on everything
- Put all extra money toward the highest-rate debt
- When that debt is paid off, roll that payment into the next highest-rate debt
- Repeat until you’re debt-free
Example: Let’s say Sarah has three debts:
- Credit card debt: $3,000 at 22% APR (minimum payment $75)
- Car loan debt: $8,000 at 6% APR (minimum payment $200)
- Student loan debt: $5,000 at 4% APR (minimum payment $50)
Sarah has an extra $300 per month to put toward debt. With the avalanche approach, she’d pay $375 toward the credit card ($75 minimum + $300 extra), $200 toward the car loan, and $50 toward the student loan.
Once the credit card is paid off, she’d roll that $375 into the car loan payment, paying $575 per month on the car while maintaining the $50 student loan payment.
How does the Debt Snowball Method work?
Made popular by Dave Ramsey, the debt snowball approach focuses on the balance size instead of the interest rates. You start with your smallest debt and work your way up to the largest. The idea is that paying off smaller debts quickly gives you psychological wins that keep you motivated.
Think of it like a snowball rolling downhill – it starts small but picks up size and speed as it goes. The first debt you eliminate frees up money to attack the next one, and you get that satisfying feeling of paying down debts and crossing them off your list.
You can use a debt snowball calculator to find the fastest way to pay off your debts.
How to Use the Debt Snowball Method:
- List all your debts by balance amount
- Arrange them from smallest to largest balance
- Pay the minimum on everything
- Put all extra money toward the smallest debt
- When that debt is eliminated, add that payment to the next smallest debt
- Keep rolling payments forward until you’re debt-free
Example: Using Sarah’s same debts, but ordered by balance:
- Credit card: $3,000 at 22% APR (minimum payment $75)
- Student loan: $5,000 at 4% APR (minimum payment $50)
- Car loan: $8,000 at 6% APR (minimum payment $200)
With the snowball method, Sarah would pay $375 toward the credit card balance ($75 minimum + $300 extra), $50 toward the student loan, and $200 toward the car loan.
After eliminating the credit card, she’d put $425 toward the student loan ($50 + $375 from the paid-off credit card) while continuing the $200 car payment.
Which strategy will help with your debt repayments?
The honest answer? Both methods work, but the right choice for debt payoff depends on your personality and financial situation.
Choose the debt avalanche if:
- You’re motivated by saving money and can stick to a plan even when progress feels slow
- You have strong self-discipline and don’t need frequent victories to stay on track
- Your highest-interest debts aren’t dramatically larger than your other debts
- You’re comfortable with spreadsheets and like tracking numbers
Choose the debt snowball if:
- You’ve tried paying off debt before, but gave up partway through
- You need to see quick results to stay motivated
- You have some very small debts that you could knock out in a few months
- The psychological boost of eliminating debts keeps you going
What about the numbers? The avalanche method will save you more money in interest over time. But here’s what matters more: the technique you’ll actually stick with.
If you start the avalanche method but quit after six months because you’re not seeing progress, you’re worse off than if you’d used the snowball method and stayed committed.
Some people combine both approaches. They might use the snowball method to eliminate a couple of small debts quickly, then switch to the avalanche method for the remaining larger balances.
Your debt won’t disappear overnight, but with consistent payments and a clear plan, you’ll get there.
Have you considered debt consolidation?
Before you dive into either payment strategy, it’s worth asking: could debt consolidation make your life easier?
Debt consolidation loans combine multiple debts into one new loan, ideally with a lower interest rate. Instead of juggling several payments with different due dates and interest rates, you’d have just one monthly payment.
Consolidating debt with a personal loan makes sense when you’re overwhelmed by multiple payments or when your credit has improved since you first took on some of your debts. Even if your credit isn’t where you’d like it to be, you might still qualify for better terms than what you’re currently paying.
Your credit history doesn’t have to hold you back. At Yup Loans, our lenders work with people who have less-than-perfect credit to find debt consolidation solutions³.
We understand that everyone’s financial situation is different, and we’re here to help you explore your options. Ready to see if debt consolidation could work for you? Request funds today and take control of your debt payments.