Snowball vs Avalanche | two ways to pay off debt

You've got a few debts. Which one first?

Say you owe money in more than one place. A credit card here. A car loan there. Maybe a little to a friend.

You can only throw so much extra money at debt each month. So the big question is simple: which debt do you knock out first?

There are two famous answers. The snowball and the avalanche. Both work. They just pick a different "first."

The one rule they share

Before either plan, you do the same thing.

Pay the smallest required amount (the "minimum") on every debt. Every month. No misses. Skipping a payment only hurts you.

Then take any extra money you have and pour it all onto one debt. Just one. That's the trick. Spreading extra money thin barely moves the needle. Stacking it on a single debt is what makes the debt disappear.

The only thing the two plans argue about is which debt gets that extra money.

The Snowball: smallest debt first

Picture a tiny snowball at the top of a hill. You roll it. It grabs more snow. It gets bigger and faster on its own.

That's the idea here.

Line up your debts from smallest to biggest. Ignore the interest rate for now. Attack the smallest balance first.

When it's gone, take all the money you were putting on it and add it to the next-smallest debt. Now you're hitting that one harder. Then the next. Each debt you clear makes your "extra" pile bigger.

Why people love it: you get a win fast. Wiping out a whole debt feels great, and that good feeling keeps you going. And finishing is the whole point.

The Avalanche: highest interest first

Interest is the extra fee you pay for borrowing. A card at 22% is charging you a lot. A car loan at 5% is charging you a little.

The avalanche says: go after the debt with the highest interest rate first, no matter its size.

Pay minimums on everything else. Throw all your extra money at the most expensive debt. When it's gone, move to the next-highest rate. And so on.

Why people love it: it saves the most money. High-interest debt grows the fastest, so killing it first keeps more cash in your pocket.

A quick example

Say you have two debts:

• Card A: you owe $500, at 22% interest
• Card B: you owe $3,000, at 12% interest

And you have $200 extra each month.

The snowball says start with Card A, because it's the smaller balance. It's gone in a few months. Quick win. Then you roll everything onto Card B.

The avalanche says start with Card A too, because 22% is the higher rate. Here both plans happen to agree.

But flip it. Imagine Card A was the big debt with the high rate. Now the plans disagree. The snowball still chases the small balance. The avalanche chases the high rate.

When they disagree, the avalanche usually saves more money. But the snowball is the one more people actually finish. And a plan you finish beats a "smarter" plan you quit.

So which should you pick?

Ask yourself one honest question: do you need the math to win, or do you need to stay motivated?

• If a quick win keeps you fired up, pick the snowball.
• If you're patient and want to save every dollar, pick the avalanche.

There's no wrong answer. The best plan is the one you'll stick with until your debts hit zero.

Start today in four steps

1. List every debt. Write down what you owe and the interest rate for each one.
2. Pick your order. Smallest balance first (snowball) or highest rate first (avalanche).
3. Pay the minimum on all of them, every month, no misses.
4. Throw every extra dollar at your number-one debt until it's gone. Then move down the list.
5. Plug your numbers into the calculator

That's it. Same money, a clear plan, and an end you can actually see.