How to Use the Debt Snowball vs. Debt Avalanche Method

Let’s be honest, looking at a pile of debt can feel… daunting. The good news is there are proven strategies you can use to tackle it head-on. But with so many different approaches out there, where do you even begin? Today, we're diving into two of the most popular debt repayment methods: the Debt Snowball and the Debt Avalanche.

Choosing the right method can make all the difference in staying motivated and actually seeing results. It’s not just about how much you owe, but how you approach paying it off.

Understanding the Methods

The Debt Snowball Method: This strategy focuses on psychological wins. You list your debts from smallest balance to largest, regardless of interest rate. You make minimum payments on all debts except the smallest one, and you throw every extra dollar you can find at it. Once that smallest debt is completely paid off, you roll the money you were paying on it into the next smallest debt, and so on.
The Debt Avalanche Method: This method is purely based on interest rates. You list your debts from highest interest rate to lowest. You make minimum payments on all debts except the one with the highest interest rate, and you aggressively attack that debt. Once it’s gone, you roll that payment into the debt with the next highest interest rate, and continue.

Let's Break Down the Pros and Cons

Feature	Debt Snowball	Debt Avalanche
Focus	Psychological Momentum	Interest Rate Savings
Motivation	Quick Wins, feel empowered	Significant cost savings
Initial Speed	Faster early wins	Slower initial progress
Cost Savings	Less savings in the long run	More savings in the long run
Complexity	Simpler to implement	Requires more calculation

Which Method is Right for You?

Here’s a little guidance to help you decide:

Choose the Snowball if: You need a boost of motivation. If you're easily discouraged or need to see quick wins to keep you going, the snowball is your best bet. The feeling of eliminating a debt quickly can be incredibly powerful.
Choose the Avalanche if: You're a more analytical person and want to save the most money on interest. If you’re comfortable with spreadsheets and want to minimize the total cost of your debt, the avalanche is the way to go.

Resources to Help You Get Started

Bankrate Debt Calculator: https://www.bankrate.com/calculators/debt/debt-snowball-calculator/
NerdWallet Debt Calculator: https://www.nerdwallet.com/calculator/debt-snowball-calculator

No matter which method you choose, the key is to create a plan and stick with it! Paying off debt takes time and discipline, but with the right strategy, you can achieve your financial goals.