Snowball or avalanche: Two ways to pay off debt explained

- When it comes to paying down debt, any method that works is a good one. But if you need some help getting started, there are two time-tested methods that are fairly simple to implement into your finances.

The methods, avalanche and snowball, are opposites in terms of strategy, but can both help you get the debt-free life you're looking for.

To get started with the SNOWBALL method, focus on your account balances.

-List your debts from the smallest balance to the largest balance.

-Each month or payment cycle, pay the minimum payment on all of your accounts.

-Put every extra dollar you have toward paying off the account with the smallest balance.

-Once the account with the smallest balance is paid off, take the minimum payment for that account plus the extra you were paying, and lump it onto the minimum payment for the next account on your list. 

-As you move from one debt to the next, you're creating a bigger snowball of money until you knock out everything you owe.


NOTE: Research shows many people get motivated by the snowball method because it's rewarding emotionally. But mathematically, avalanche saves more money in the long run. Here's how it works.

To get started with AVALANCHE - focus on the interest rates.

-List your debts by their interest rates, from highest to lowest. 

-Each month or payment cycle, pay the minimum payment on all of your accounts.

-Put any extra money toward the account with the highest interest rate until the account is paid off.

-Then take whatever you were paying on that bill - and slide it down to the next one on your list.

-This creates the avalanche that pushes your debt down until it's all gone.

The most important thing to remember: Pick the plan that works for you. If you don't like it, you won't follow it, and you won't get out of that debt. 

We spoke to two people who had success with both methods about why they worked. 

Justin Culper is the assistant editor at the personal finance website The Penny Hoarder. Culper said he moved from Florida to Vermont and back again, racking up $10,000 on credit cards.

“It was like a pit in my stomach, it really was. It wasn't good,” Culper said.

He went with the avalanche method to attack his bills from the top down in just six months.

“Find the one with highest possible interest rate and say, 'Ok this is my one to chisel at,' and say 'Ok, what is my minimum payment for that?'” Culper explained.

His colleague, Lisa Rowan needed something with more visible progress after her clothing business didn't make it.

“Suddenly I had to beg, borrow, and steal from myself. Just that mounting desperation, like one bill after another," Rowan recalled.

So she used the snowball method and got rid of $30,000 in bills in 18 months by paying off the smallest ones first.

“Even a student loan that had $500, [I said], 'Let’s get rid of it,'” she said.

Culper couldn’t stomach the idea that he was losing money to interest payments.

“Why am I leaving these high-interest cards sitting here, not being paid, gaining interest and debt, and paying off these little cards? It just didn't make sense to me,” he said.

If you want to know more about how each method would impact your finances, visit this comparison calculator at

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