Debt Snowball or Debt Avalanche?

Published March 2021
Woman with a lot of bills to pay

If you are trying to figure out the best way to pay down debt on your own, you should consider which method works best for you – the debt snowball or debt avalanche.

Key Points: 

  • The debt snowball method focuses on smaller debt first, potentially providing encouragement to continue your debt relief journey.
  • The debt avalanche method is generally faster and cheaper but can be discouraging when the first payoff takes so long.
  • The best option is the one that you can stick to until you are debt-free.

Before you use either method, you need to create a budget including the minimum payments for all of your current debts. The debt snowball and debt avalanche methods will help you decide how to use any extra income you have after you pay the minimums.

Once you have your budget ready, you can decide which method is best for you to get out of debt.

Debt Snowball Method

The debt snowball method has you start paying off the smallest debt and work your way up to paying off your largest debt, regardless of interest rates. Since you will achieve payoff much faster with this method, you may be more likely to continue paying off your debts.

Pros of the Debt Snowball Method
  • There is less time until you successfully pay off a debt, which could encourage you to continue paying off your larger debts.
  • Paying off a smaller debt frees up funds to use toward paying off your larger debts, meaning you may be able to pay off your debt using increasingly larger payments each month.

Cons of the Debt Snowball Method

  • It may take more time to pay off your total debt, costing you more in interest fees.
  • Your larger debts will continue to increase while you are paying off the smaller debts.

If you think this is the best option for you but are concerned about your debt’s high interest rates, you could consider a debt consolidation loan. Keep in mind that this option will only benefit you if you still have a good credit score and meet other criteria to qualify for a low enough interest rate to make it worthwhile.

Debt Avalanche Method

The debt avalanche method begins with paying off debt with the highest interest rate and then working your way through debt with lower interest rates. This method will generally save you more money by paying less interest, but it can also be discouraging since it could take a bit of time before you have your first payoff.

Pros of the Debt Avalanche Method

  • You generally save more money by lowering the overall interest you will need to pay.
  • The debt avalanche method may result in lower payments over time, after you pay off the bigger debt.

Cons of the Debt Avalanche Method

  • It may take longer to achieve your first total pay off since you may be tackling the larger debt first.
  • You may become frustrated with this longer-term strategy and give up on paying off your debt before you’ve achieved your goal.

Which debt relief strategy is best for you?

The best debt relief strategy comes down to personal preference and what you can stick to. The difference in payoff time and cost between the debt avalanche and debt snowball methods doesn’t matter if you are not able to follow through on the debt relief strategy until you are debt free.

You may benefit from the debt snowball method if you:

  • Have tried to pay down debt before on your own but failed.
  • Need encouragement to continue paying off your debt until you are debt-free.

You may benefit more from the debt avalanche method if you:

  • Can stick to the strategy without the need for little wins.
  • Want to pay off your debt as quickly as possible

If you still can’t decide, plot out your debt payoff timelines for both to see which one will be most beneficial to you and your financial situation. You can even combine the two if that will help you successfully pay off your debt.

If you find that paying down debt on your own is not working out, give a ClearOne Advantage Certified Debt Specialist a call at 866-481-1597 to discuss your best debt relief options or get a free savings estimate.


ClearOne Debt Settlement CTA


Topics: Financial Education