Debt Snowball vs Avalanche: Which Is Best For You To Use?

When searching ways to pay off debt, you might’ve come across the debt snowball vs avalanche method. Understanding the differences between both allows you to see how each method can benefit you. Selecting either of these debt payment methods will ultimately help you get rid of any debt you have.

Debt is one of the leading causes of financial stress.

Dealing with this kind of stress can impact your mental health as well as your finances negatively.

When you don’t know how to clear out debt, you can find yourself drowning in it. It then seems like an endless battle trying to pay it all off.

It can even get to a point where you start to wonder if you will ever be debt free.

As someone who dealt with debt at a young age, I know what it’s like trying to find methods to pay off debt that work.

To narrow down this search for you, you will be learning about two very helpful methods worth using.

That is, the debt snowball and debt avalanche methods.

You will even understand what the whole debt snowball vs avalanche debate is all about.

This post is all about debt snowball vs avalanche method to determine which is best for you to use.

This post may contain affiliate links, which means I may receive a commission at no extra cost to you, if you make a purchase through a link. Please view the full disclosure for more information.

Debt Snowball vs Avalanche: Which Is The Best Debt Payoff Method?

Is It Better To Debt Snowball Or Avalanche?

In order to answer this question, you have to fully assess your situation.

Along with assessing your situation, understanding how each method works is part of deciding which is best for you.

Though both methods have a different way of dealing with debt, the end result is the same. That is, to pay off all debt that you currently have.

After learning about the differences, you’ll have a better idea of which one to use.

If the first method doesn’t work, don’t worry.

Since you’ll have knowledge about both, you’ll be able to use the latter and see if that brings you the results you are looking for.

Regardless of which method you use, prioritizing paying off debt is a good money habit worth doing.

What Is The Debt Snowball Method?

In simple terms, this is a strategy to tackle debt by focusing on paying off your smallest debt balance first.

Once you clear this out, you roll the amount you would’ve used towards that balance and put it towards your next smallest balance.

Each time you use this method, the amount you put towards your debt continues to grow and grow. Similar to a snowball as you continue to roll it.

You keep repeating this process until you completely pay off all debt.

If you want to start using this method, make sure to use the steps below.

You can also look online and search for debt snowball calculator to help with the process.

What Are The 4 Steps In The Debt Snowball?

1. Write Down All Debt

On a piece of paper or spreadsheet, list out all debt you currently owe. Start with the smallest amount and work your way towards the largest amount.

Make sure to include the full balance as well as the minimum payments required to make for each one.

Doing so will allow you to take a step back and see the whole picture.

2. Pay The Minimum

Every month, make the minimum payment on each balance with the exception of the smallest one.

Here, you are going to put as much money as you possibly can towards that balance.

You want to keep doing this until you completely pay off the smallest balance. The sooner you get this paid off, the better.

3. Tackle The Next Smallest Balance

You are then going to take whatever amount you were using to pay off the first balance and roll it over onto the next.

This will in a way help you pay off your debt quicker.

This is because it allows you to put more and more money each time towards your subsequent balances.

This is why this is called the debt snowball method. As a snowball continues to roll, it starts to get bigger and bigger.

While doing so, you still want to make sure you are paying the minimum towards your other balances.

4. Rinse And Repeat

Keep repeating this process until you pay off all debt.

What Is The Advantage Of Using The Debt Snowball Method?

A couple of advantages come with using this specific method.

The first advantage is that this method serves as a sort of motivation booster.

As you continue to pay off small debts and work towards the largest one, you’ll be able to look back to see how far you’ve come.

The second advantage is that it is incredibly easy to stick with this method.

Since you are simply making a list containing your debt from the smallest to largest balance, you don’t have to focus on annual percentage rates (APRs).

As soon as you finish paying off the smallest debt, you move onto the next. That’s it.

What Are The Disadvantages Of Debt Snowball?

Any time there are advantages to something, there are of course going to be disadvantages.

The biggest disadvantage with this method is that it can take longer to clear up all debt.

This is because your largest balances could have high APRs.

Meaning, while you’re addressing your smallest balances, your largest balances can be accruing high amounts of interest.

As you can see, the second disadvantage of this method is having to pay more money.

Your overall balance greatly increasing means having to cough up even more money until you’re completely debt free.

What Is The Debt Avalanche Method?

The debt avalanche method works the opposite compared to the snowball method.

Meaning, it focuses on paying the balance with the highest interest rate first.

Once you pay this off, take that money and apply it to the next highest interest rate balance.

Think of this as making a really huge dent to your debt as each month goes by.

Eventually, you will be able to fully clear out all debt that you owe.

If you want to tackle your debt using this method, you can do so by following the steps below. Make sure to look online and search debt avalanche calculator. This makes getting started very easy.

How Does The Debt Avalanche Method Work?

1. List Out Your Debt

Similarly to the snowball method, you are going to first write down all debt that you owe.

You’re going to then take an extra step and also include the individual interest rate for each balance.

Once you list everything out, organize what you owe starting with the balance with the highest interest rate. Keep listing out your balances in order until you reach the one with the lowest interest rate.

From here, you’ll know exactly which balance to start tackling first.

2. Determine An Amount

Think about a fixed amount that you plan to put towards your debt each month.

Make sure that this amount makes a huge dent in your debt, but is also within your means.

Meaning, this amount should not be money that you use to pay other necessary expenses. Expenses like your utility bills or groceries.

Related:

• 17 Must Know Tips To Save Money On Groceries
• 21 Brilliant Ways To Save Money On Your Electric Bill
• 25 Highly Effective Water Saving Tips To Reduce Your Water Bill

3. Pay The Maximum

Each month, pay the maximum amount you possibly can towards the debt with the highest interest rate.

For example, if you have $400.00 left over after paying all your bills, use that amount to put towards your debt.

Keep doing this until you pay that balance off in full.

Though your main focus is the debt with the highest interest rate, you don’t want to disregard your other debt.

Make sure you are still paying the minimum amount for all other balances due.

4. Target The Next Highest Balance

Once you finish paying off your first balance, move on to the next one.

Stay consistent each time with whatever amount of money you selected at the beginning.

Using the previous example of $400.00, make sure that each month this is what you are putting towards your next highest debt.

5. Repeat The Cycle

Keep this rhythm going until you pay off all your debt.

What Is The Advantage Of Using The Debt Avalanche Method?

The biggest advantage that comes with using this method is the amount of money you will save on interest. Which if you didn’t know, is one of the many reasons people choose to save money.

Interest is what causes you to pay more money than you need to in order to finish paying off debt.

It also increases the length that it takes to do so.

Speaking of length, another huge advantage with this method is that it allows you to completely eliminate your overall debt quicker.

This is done by making sure to stay consistent with your payments each month to reduce interest from accruing.

What Are Some Disadvantages Of The Avalanche Method Of Eliminating Debt?

Though this method may seem great at first glance, there are definitely some disadvantages worth knowing about.

The first disadvantage is that the first debt you address will most likely be the highest balance with the highest interest.

This means that it may take a longer to completely clear out that specific balance.

The second disadvantage is that staying motivated becomes difficult. Since it may take some time before seeing any progress, this causes people to feel discouraged.

It can even get to a point that you get so discouraged it makes you want to give up.

Debt Snowball vs Avalanche Pros And Cons

Now that you are aware of both methods, it is easy to compare the pros and cons between the two.

Down below is a chart that gives an overview to help you see the bigger picture.

When deciding which method to use, make sure to first look over this chart. This will make coming up with a plan to tackle your debt a lot easier.

Should I Pay Off Big Debt Or Smallest Debt First?

When you have a lot of debt, it can be confusing knowing which one to handle first.

The answer to this question is it really just depends on the type of person you are.

On one hand, if you need to see quick progress in order to stay motivated to keep going, then pay off your smallest debt first.

This is where the debt snowball method will benefit you the most.

As you continue to see progress, this will help you keep going until you pay off all debt.

On the other hand, if you have patience, are consistent, and prefer making a huge dent in your debt, then work on paying off big debt first.

Here, you will greatly benefit using the debt avalanche method.

By making huge dents, you will eventually pay off all debt as well as save money in the process of doing so.

This post was all about debt snowball vs debt avalanche method so that you have an idea on which to use when handling debt.

If you’ve been wondering how to pay off debt with no money or how to pay off debt in a year, you now know how.

Depending on your circumstances, it’s not always possible to avoid debt.

When not handled correctly or in a timely manner, it can lead to financial stress.

This is why it is important that you know methods to properly address debt that comes up.

Using either the debt snowball or debt avalanche method are great ways to ensure you can easily clear out debt you currently have or that you come across.

If you found even the tiniest bit of information from this post helpful, just know that it was made simply for you.