Snowball vs Avalanche: Is it even a question?

We have so many ways to get into debt nowadays.  Credit cards, mortgages, student loans, car loans and, God forbid, payday loans.  With so many ways to get into debt it’s important to know the quickest ways out of debt.  And it’s not by calling one of those debt “reconciliation” services.  The first step to pay off debt is to not add to it.  Cut up the credit cards and don’t take any more loans.  In a debt emergency such as large credit card debts, you really have to go into crisis mode and cut out whatever debt that you can and put whatever resources available towards paying off that debt.  The next step is to stay current on all of your debts to avoid paying any late fees.  This is done by simply making the minimum payment on all of your debts.

We of course can’t stop with just minimum payments because this will keep you in debt for a long long time due to interest.  The next best step after making minimum payments is to gather up all the money you can and attack the debt with the highest interest rate.  Or is it the debt with the lowest balance?  This is where some financial gurus slightly differ.  Some advocate attacking the debt with the highest interest rate first, known as the Avalanche method.  Others, most notably a “guru” by the name of Dave Ramsey, advocate paying off the debt with the lowest balance first, dubbed the Snowball method.  While everybody’s situation is a little different, the Avalanche method is almost always the way to go.  And the numbers prove it.

Before we go into the numbers, it is worth it to know WHY someone would opt to use the snowball method to pay off their debt.  According to Ramsey’s website, “You need some quick wins in order to stay pumped enough to get out of debt completely. When you start knocking off the easier debts, you will start to see results and you will start to win in debt reduction.”  This is drawing on the idea that some people need to see quick results in their debt reduction in order to gain some momentum and keep attacking their debt.  Continuously attacking the lowest balance debt will produce “wins” that keep you wanting to attack your debt.  If this method is enough to get someone into debt destroying mode, then there is some value in it as it is much better than not paying your debt at all.    However, this should only be a temporary measure because using the Avalanche method instead will result in less interest paid over time.  And there is a handy little calculator to prove just that. is a great calculator that allows you to enter your loan’s balance, interest rate and minimum payment.  You then enter your desired monthly payment on top of that and you can see the results using the Avalanche or Snowball method.  I used the following hypothetical numbers:

-Credit card:  $8000, $80 minimum, 15% interest

-Car Loan:  $5000, $50 minimum, 8% interest

-Student loan:  $10000, $100 minimum, 7% interest

First off, I was curious to see how long it would take to pay off these loans with just the minimum payment only.  The results said the loans would be paid off by January 2047 with almost $69,000 paid in interest!  This shows the danger of not attacking your debt at all.  In any case, I entered a $200 additional monthly payment on top of the minimum payment.  With the Snowball method, the loans would be paid off by August 2019 with $7546.01 in interest paid.  MUCH better than not paying any extra in principal.  With the Avalanche method, the loans would be paid off in May 2019 with $6273.93 in interest.  That’s almost $1300 less in interest!  I don’t know about you, but that seems like a big enough win to me to keep paying off debt.  The Avalanche method wins in every situation.

Using the calculator can be a very enlightening and sometimes eye opening experience.  Seeing exactly what month your debt will be paid off is pretty empowering, especially if you’re saddled with many student loans like most broke professionals.  And seeing how much in interest you will save using the Avalanche method over the Snowball method is very motivating as well.  It can be just the swift kick in the rear you need to start obliterating your debt.



  1. Avalanche, avalanche, avalanche.

    “Do you want me to give you $100 for nothing, or $200 for nothing? I’ll take $100 because its easier to count”.

    Its really not a question!

    • Syed says

      Thanks for the comment. Couldn’t agree more!

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