Snowball vs Avalanche: The Math of Getting Out of Debt
Compare the two best debt payoff methods with real numbers and learn which one saves more money.
Paying off several debts at once is easier with a method. The two best known are the avalanche and the snowball. Both use the same idea: pay the minimum on everything, and put every spare dollar on one target debt.
Avalanche: highest interest first
List debts by interest rate and attack the highest rate first. This minimises total interest, so it is the cheapest method mathematically.
Snowball: smallest balance first
List debts by balance and clear the smallest first. You get quick wins, which keeps many people motivated. It usually costs slightly more in interest.
A worked example
Say you owe $4,000 at 24%, $2,500 at 19% and $9,000 at 7%, with minimums of $120, $75 and $180, and you can add $200 a month. Using the debt payoff planner: avalanche finishes in 2 years 8 months with about $2,384 of interest, snowball also takes 2 years 8 months with about $2,514, and minimums only take 5 years with about $5,412. The real win is adding the extra $200, not choosing between methods.
Tips that speed things up
- Roll each cleared debt's payment into the next.
- Use windfalls such as tax refunds on the target debt.
- Ask lenders for lower rates or consider a 0% balance transfer, watching the fee.
- Check your debt-to-income ratio to track progress.
This article is general education, not financial advice.