Paying Off Debt: Snowball vs. Avalanche

Looking for the most effective way to pay off your debt quickly? Two of the most popular methods are called the Debt Snowball and the Debt Avalanche.


The Debt Snowball, brought to us by Dave Ramsey, is when you pay off all of your debt by focusing on the loan that has the lowest balance first, regardless of interest rates. You will then make minimum payments on all of the other loans you have and put all of your extra cash towards your smallest debt.


Once you finish one loan, you use the extra cash you have from paying off that loan to go towards your next lowest balanced loan. The Debt Snowball method is great because you see your progress quickly, however it’s criticized for not being the most mathematically efficient.


The Debt Avalanche method is very similar to the Debt Snowball method, except you order your debts based on the level of interest. You start by paying off your loans that have the highest interest rate first.


This method is much more mathematically efficient and helps you pay off your debts faster. While this method will allow you to pay off your debt quicker than the Snowball method, it takes a very, very long time to start seeing your results with this method. Want to learn more? Check out this video for a great example of how these two debt pay-down methods work.