Snowball vs. Avalanche: How Should I Pay Down My Debt?

So if you’re dreaming of a fully-funded retirement or a luxurious, guilt-free vacation, make sure your focus on paying down debt this year. If you’re not sure how to begin, keep reading! We cover the two most popular approaches to help you get our of debt this year.

Snowball Method

The type of approach you choose is entirely personal and up to you. If you’re someone who loses focus easily, then the snowball debt payoff method may be your best bet.

The snowball method prioritized on paying down the lowest debt first, regardless of interest rate. You’ll pay the minimum amount on all other debts and put as much money as you can towards the debt with the lowest balance.

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The benefit of this method is that you see progress very quickly. Once the smallest debt is paid off, you roll that money into paying off the second lowest balance. You continue this, building up payments with each debt, until all your debt is gone.

Avalanche Method

The avalanche debt payoff strategies differs in that it has you focus on paying the debt with the highest interest rate first. Because high interest debt can be more damaging, this approach helps you pay less in the long run, although the lack of quick wins can cause many people to lose motivation.

The avalanche method has you pay down the debt with the highest interest rate first, regardless of balance. Pay the minimum amount on all other debts while you focus the bulk of your resources on one debt at a time.

Once the highest interest debt is paid off, you’ll roll that payment into the second-highest debt, and so on.

Which is best?

The approach you choose to use to pay down debt is entirely up to you. There are benefits to both methods, especially when the end result means you’re debt free!

If you need a quick win to help motivate your progress, the snowball method may be your best approach. You’ll start seeing debts go down quickly, because those smaller debts will get taken care of quickly and leave more to roll into your other debts.

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Photo by Mikhail Nilov on

However, debt with high percentages can add up quickly and cause debt to pile up when left alone. If you want to make sure you deal with the most dangerous debt first, then go with the avalanche method. Just know that it can take longer to see progress on paying down debt.

Debt Free in 2023

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