Debt Snowball vs Avalanche: Which Method Is Right for You?

debt snowball vs avalanche

In life, unexpected events can leave you between a rock and a hard place. You may face emergency expenses without the means to pay for them. While borrowing money can get you out of the situation, you must face debt repayment. If you have incurred debt, our debt snowball vs avalanche guide can help you decide which payoff strategy is right for you and how to implement it.

Debt can be a primary source of stress and financial hardship — approximately 340 million Americans currently share the $16.9 trillion household debt in the country. Many people find themselves in the difficult position of trying to figure out the best way to pay off their debts.

Without a proper action plan, achieving debt freedom can be challenging. However, there are various strategies you can employ to expedite the process of becoming debt-free.

In this blog post, we will explore the differences between the debt snowball and debt avalanche methods, weigh their pros and cons, and help you determine which strategy is best suited to your financial situation.

What is The Debt Snowball Method?

The debt snowball method focuses on behavioral psychology to motivate debt repayment. With this method, you start by listing your debts from smallest to largest, regardless of interest rates.

You then concentrate on paying off the smallest debt first while making minimum payments on the others. Once you’ve paid off the smallest debt, move on to the next smallest debt, and so on.

For example, you have the following debts:

  • $20,000 student loan with an interest rate of 5%
  • $10,000 car loan with an interest rate of 2.5%
  • $5,000 credit card debt with an annual percentage rate (APR) of 10%

If you use the debt snowball method, you will focus on paying off the $5,000 credit card debt first, followed by the $10,000 car loan, and finally, the $20,000 student loan.

The idea behind this approach is to create momentum and celebrate small wins along the way, which can help you stay motivated and committed to your debt repayment journey. It also enables you to gain confidence from each successive repayment — hence the phrase “snowball effect.


Pros of the Debt Snowball Method

The debt snowball method provides several advantages:

  • Psychological boost: By paying off smaller debts first, you experience a boost in confidence and a sense of progress toward debt freedom, as each debt paid off is a milestone that encourages you to keep going.
  • Motivation: The debt snowball method emphasizes quick wins, which can keep you motivated throughout the repayment process. Checking off a debt on your list can be incredibly satisfying.
  • Simplicity: This approach is easy to understand and implement since you can organize your debts by size. The smallest-to-largest list can help those without a financial background prioritize their payments and simplify the process.
  • Flexibility: The debt snowball method allows you to adjust the payment amount as needed or switch between debts depending on your financial situation. This makes it the perfect debt payoff plan for those on a tight budget.


Cons of the Debt Snowball Method

While the debt snowball method has several advantages, it also comes with some drawbacks, including:

  • Interest accumulation: The debt snowball method does not consider interest rates, which means you may end up paying more in interest over the long run if you don’t prioritize high-interest debts.
  • Longer time to debt freedom: Focusing on small debts first can result in a longer overall repayment period, especially if your larger debts have high-interest rates. It also makes it more challenging to reach your debt-free goal as quickly as possible.


What Is The Debt Avalanche Method?

In contrast to the debt snowball method, the debt avalanche method prioritizes debts depending on their interest rates. With this approach, you arrange your debts from the highest interest rate to the lowest.

You then allocate extra funds toward the debt with the highest interest rate while making minimum payments on the rest. Once you’ve paid off the highest-interest debt, you can move on to the next highest-interest debt, and so forth.

Let’s use the previous example:

  • $20,000 student loan with an interest rate of 5%
  • $10,000 car loan with an interest rate of 2.5%
  • $5,000 credit card debt with an annual percentage rate (APR) of 10%

If you use the debt avalanche method, you will prioritize the $5,000 credit card debt first since it has the highest interest rate, then the $20,000 student loan with the second highest interest rate, and finally, the $10,000 car loan with the lowest interest rate.

The debt avalanche method helps minimize the total interest paid and the overall repayment period. Focusing on higher interest rate debts first can reduce the interest you pay and help you become debt-free faster.


Pros of the Debt Avalanche Method

The debt avalanche approach offers the following advantages:

  • Faster debt repayment: Prioritizing debts with higher interest rates allows you to pay off your debts more quickly than with the debt snowball method.
  • Financial efficiency: This method helps you pay off your debt more efficiently since it targets high-interest debts first. This can save you thousands of dollars in interest payments and help you become debt-free faster.
  • Lower interest payments: Since you pay lower-interest debts last, the interest accrued will be significantly lower.
  • Long-term financial benefits: With the debt avalanche method, you can build up your credit score faster by focusing on the debts with higher interest rates, which impact your overall credit score more significantly.


Cons of the Debt Avalanche Method

Although there are several benefits to using the debt avalanche approach, it also comes with some disadvantages, including:

  • Psychological impact: The debt avalanche method does not emphasize quick wins like the debt snowball method. Staying motivated and committed to your repayment plan can be more complicated since you may take longer to see progress.
  • Daunting debt list: With this approach, you need to know your interest rates to arrange your debts from highest to lowest. This can be overwhelming for those who don’t have a good grasp on their financial information.
  • Rigid payment plan: The debt avalanche method requires you to stay on track with the payment plan. Any deviation could potentially alter the result or extend the repayment period.


Choosing The Right Debt Payoff Strategy For you

The debt snowball and the debt avalanche methods offer different advantages and disadvantages, so it's essential to understand their differences before deciding. Choosing between the two ultimately depends on your financial goals, personality, and financial situation.

Here are some factors to consider when deciding which method is suitable for you:

  • Amount of debt: If you have multiple debts with different interest rates, the debt avalanche method may be more suitable as it helps lower your total amount of interest paid. On the other hand, if you only have a few small debts, it may make more sense to focus on reducing them by using the debt snowball method.
  • Number of debts: If you have many debts, the debt snowball method may be easier to manage as it focuses on one at a time. If you have fewer large debts, the debt avalanche method can help you first tackle your highest interest rate debts.
  • Interest rates: Consider the interest rates on your debts. If you have high-interest debts, prioritizing them with the debt avalanche method can save you money in the long run. The debt snowball method may be more beneficial if your debts have low-interest rates.
  • Budget: If you have a limited budget, the debt snowball method allows you to adjust your payment amounts as needed or switch between different debts. The debt avalanche method requires a more rigid repayment plan, so it may not be suitable if your budget is tight.
  • Financial discipline: If you want to pay off your debts quickly and need the motivation to see results sooner, the debt snowball technique is ideal since it focuses on paying off your smaller debts first. On the other hand, if you can stay disciplined with budgeting and are looking for a faster way of paying off debt, the debt avalanche method may be right for you.
  • Motivation style: Reflect on what motivates you personally. If you thrive on quick wins and a sense of progress, the debt snowball method might be a better fit. The debt avalanche method could be more appealing if long-term goals and financial savings inspire you.
  • Timeframe to debt freedom: Consider how quickly you want to become debt-free. The debt avalanche method helps minimize the interest you pay, so it can be more beneficial if you’re looking to pay off your debts sooner.
  • Financial stability: If you have an unpredictable or low income, the debt snowball method can help you adjust your payment amounts as needed. The debt avalanche technique requires a more rigid budgeting approach, so it may not be suitable if you have concerns about income stability.
  • Additional sources of income: If you have extra income from a side hustle or other source, it can help you speed up your debt repayment process. The debt avalanche method can be particularly beneficial if you have additional cash flow, enabling you to tackle high-interest debts first.

Once you’ve considered the factors mentioned, you can decide which debt payoff strategy is most suitable for your financial situation. Whichever method you choose, you will learn valuable money management skills that you can use throughout your life.

Making mistakes, deviating from your plan, or switching strategies doesn’t make you any less of a financial warrior. Remember to give yourself some slack as you work toward getting out of debt.


How to Implement Your Chosen Method

Once you’ve chosen between the debt snowball and debt avalanche methods, it’s time to implement your strategy. Here are the steps to get started:

  1. Create a debt repayment plan: A debt repayment plan outlines your debts, payment dates, and budget. Start by listing all your debts, including the loan amount, outstanding balances, interest rate, and minimum payments required for each debt. 
  2. Set a budget: Assess your income and expenses to determine how much you can allocate to debt repayment each month. Stick to your budget to maximize your progress.
  3. Increase your debt payments: Allocate additional funds toward your chosen debt repayment strategy. Consider cutting expenses or finding ways to increase your income to accelerate your progress.
  4. Pay on time: Settle the minimum required amounts for your debts by the due date each month to help you avoid late fees and maintain a good credit score. You can also automate your payments or set up reminders to help you stay on track.
  5. Track your progress: Keep an eye on your progress and adjust the plan if needed. Celebrate your successes along the way to stay motivated, and remember that every step toward becoming debt-free is a victory. 


How to Stay Motivated Throughout the Debt Payoff Process

Paying off debt is a journey that requires discipline and persistence, and it’s easy to become discouraged on the way. Here are some tips to stay motivated:

  1. Set milestones: Break your debt repayment plan into smaller milestones or goals you can work toward. Celebrate each milestone as you progress, and keep yourself motivated with tangible results.
  2. Remember your goals: When you feel discouraged, remind yourself why you started. Visualize a life free of debt and use that vision to help you stay on track.
  3. Don’t give up: Debt repayment is a marathon, not a sprint. Stay focused on and committed to your plan, even if it takes longer than you expect.
  4. Reward yourself: Find small rewards that will motivate you during debt repayment. Acknowledge your hard work and dedication by treating yourself to something small but meaningful.
  5. Find support: Share your debt repayment journey with friends, family, or online communities. Support and accountability can help you stay on track when the going gets tough.
  6. Ask professionals for help: If you’re having trouble staying motivated or managing your finances, seek help from a financial professional. They can help you review your budget, repayment plan, and other strategies to reach financial freedom faster.

Paying off debt can be challenging but also incredibly rewarding. By choosing the debt payoff strategy that best fits your needs and implementing it with discipline and perseverance, you can be on your way to debt freedom.



The debt snowball and avalanche methods are two effective approaches to debt repayment, each with advantages and considerations. By understanding the differences between these methods and evaluating your financial situation and goals, you can determine which strategy aligns best with your needs.

Regardless of your chosen method, remember that the key to successfully paying off debt is consistent effort, perseverance, and a commitment to your financial well-being. You can get out of debt and achieve financial freedom with the right strategies and support.

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