Both methods work the same way at the start: pay the minimum on every debt, then put every extra dollar toward one target. The difference is which debt you target first.
The snowball method
Pay off your smallest balance first, regardless of interest rate. Each payoff gives you a quick win and frees up money to roll into the next debt.
The avalanche method
Pay off the highest interest rate first. Mathematically, this saves the most money and often gets you debt-free a little faster.
How to choose
- Choose snowball if motivation is your biggest challenge.
- Choose avalanche if you are disciplined and want to minimize interest.
- Either is far better than paying only minimums.
The best debt payoff plan is the one you will still be following six months from now.
Speed things up
Call your card companies and ask for a lower rate, look into a balance transfer card with a 0% intro period, and send any windfall straight to your target debt.
Jordan ReyesMoney Editor, Femeri
Jordan writes about money with a focus on practical, realistic advice you can use today.
