Debt Repayment Strategies: Avalanche vs Snowball Method
Compare avalanche and snowball debt repayment strategies to find the best approach for your financial goals.
WhatDoIDo.Now Team
1/15/2025
Debt Repayment Strategies: Avalanche vs Snowball Method
Struggling with debt? You’re not alone. Two proven strategies—the avalanche method and the snowball method—can help you take control and pay off debt faster. But which one’s right for you? In this post, we’ll compare these debt repayment powerhouses, break down how they work, and show you how to pick the best fit for your financial goals. Let’s get started on your path to debt freedom!
What Is the Avalanche Method?
The avalanche method targets high-interest debts first, saving you money over time. Here’s the game plan:
- List Your Debts: Sort them by interest rate, highest to lowest.
- Minimum Payments: Pay the minimum on every debt.
- Extra Cash: Throw all extra money at the debt with the highest interest rate.
Pros
- Saves Big on Interest: Tackles costly debts first.
- Faster Payoff: Reduces total time in debt.
Cons
- Slower Wins: Large balances can delay progress.
Best For: Math lovers and disciplined planners who want maximum savings.
What Is the Snowball Method?
The snowball method, championed by Dave Ramsey, focuses on small wins to build momentum. Here’s how:
- List Your Debts: Order them from smallest to largest balance.
- Minimum Payments: Cover the minimums on all debts.
- Extra Cash: Put extra funds toward the smallest debt until it’s gone.
Pros
- Quick Motivation: Small debts vanish fast, keeping you pumped.
- Simpler Tracking: Fewer debts mean less stress.
Cons
- Higher Interest Costs: High-rate debts stick around longer.
Best For: People who thrive on quick wins and need a morale boost.
Avalanche vs Snowball: A Real Example
Imagine you’ve got these debts:
- Credit Card: $15,000 at 18% APR
- Car Loan: $10,000 at 5% APR
- Student Loan: $5,000 at 6% APR
Avalanche: Pay off the credit card first. Then roll that payment to payoff the student loan.
Snowball: Start with the student loan (smallest), but high-interest lingers on bigger loans, costing more.
Quick Hit: Avalanche saves more long-term, but snowball keeps you motivated. Run the numbers with the Windfall Calculator.
Which Should You Choose?
- Avalanche: Ideal if you’re after savings and can stay the course.
- Snowball: Perfect if small victories keep you motivated.
Can’t decide? Check out How to Use a Windfall to Pay Off Debt Efficiently for a hybrid approach!
People Also Ask
- Which method pays off debt faster? Avalanche usually wins on time and money.
- Can I mix both strategies? Absolutely—blend them for a custom plan.
Ready to slay your debt? Whether you’re Team Avalanche or Team Snowball, start today! Dive deeper with our Windfall Management Ultimate Guide or crunch your numbers with the Windfall Calculator.
