Avalanche or snowball: clearing debt in the right order
Two methods compared month by month on the same three debts, with the interest each one costs.
Once minimum payments are covered, every extra dollar should go to one debt at a time. The two popular orders are the avalanche (highest interest rate first) and the snowball (smallest balance first).
Three debts, one budget
Assumptions for illustration only: $450 a month in total toward these debts.
| Credit card · 24% APR | $4,200 · min $105 |
| Personal loan · 11% APR | $2,500 · min $80 |
| Store card · 29% APR | $900 · min $30 |
The result, simulated month by month
| Avalanche: months to debt-free | 20 |
| Avalanche: total interest | $1,275 |
| Snowball: months to debt-free | 21 |
| Snowball: total interest | $1,511 |
| Avalanche saves | $236 |
The avalanche usually costs less in interest because the most expensive balance shrinks first. The snowball gives faster early wins because small balances disappear first, which some people need to keep going. In this example the difference is $236; pick the method you will actually stick with.
Stop the leak first
Neither method works while new spending lands on the same cards. Pause card use for anything outside your budget, and keep the emergency fund growing so the next surprise does not go on the card.
General education, not personal financial advice. Figures are illustrations computed from the stated assumptions.
The 50/30/20 budget, worked through
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