How To Destroy Debt: Debt Snowball or Debt Avalanche?


When you get to that point where you know it is time to do something with this mountain of debt, how do you want to go about it? Are you an avalanche or a snowball?  Do you want to roll down the mountain gaining momentum and increase your size as you go like a debt snowball or would you instead start out with a slow rumble then watch it collapse down the mountain in big chunks like a debt avalanche?

There is no right answer here.  The most important thing is to get out of debt.  Grab the control back and be the boss that I know that you already are!

Are there other options to slash your debt?  Are you like me and use your emotions as your guide and go after that one debt that really ticks you off the most?  You know what I am saying here – that one debt keeps you up at night.

When you daydream about who you want to be when you grow up and all of the good you want to do in the world, what one expense pops into your head FIRST that is holding you back from achieving your goals?  Would you instead tackle that before anything else?  Does emotion trump interest or momentum for you?

Debt Snowball

This is the Dave Ramsey way.  We list debts smallest to largest not paying any mind to the interest rate.  Then, you find the money to pay off that smallest debt AS FAST AS YOU CAN!

When you pay off this little debt quickly, it does something to your psyche.  It gives your enthusiasm to get out of debt a considerable boost. And it affirms your belief that you CAN do this!

After that first debt is paid off, you take the monthly payments that you were making to that debt and add them to the payments for the next debt, knocking the second debt out lickety-split.

Let me give you an example with real numbers:

Student loan debt: $15,987.23 (3% interest)

Kohl’s Card: $872.10 (24% interest)

Visa: $5,389.97 (18% interest)

Dentist: $1,250 (8% interest)

Aunt Dinah: $2,500 (zero interest)

Car #1: 9,714.18 (6% interest)

Car #2: $28,607.09 (9% interest)

Putting these in order from smallest to largest looks like this:

Kohl’s Card: $872.10

Dentist: $1,250

Aunt Dinah: $2,500

Visa: $5,389.97

Car #1: $9,714.18

Student Loan: $15,987.23

Car #2: $28,607.09

If you were going with the Debt Snowball technique, you would start with that Kohl’s charge card first (well, second – after cutting it up into teeny tiny pieces).  If the minimum payment on that is $30 a month, you would by now have been revamping your budget and have another $100 to throw on that – making it $130 a month.

BUT… You also had a garage sale and sold a bunch of larger ticketed items on Facebook Marketplace to come up with another $450 to add to that. So, your payment for this month is not $30.  It has gone up a tad and is $580!!!  Leaving you with a balance of $292.10.

This sense of accomplishment is what the Debt Snowball is all about.  Getting super excited about paying off debt gives you the courage to do things you previously may not have wanted to do.

For example, you have paid off your Kohl’s card, and you can apply that $130 on top of the $200 payment you are already making to the dentist which is the second debt on your list.  This is where the theory of the snowball comes from.  Have you ever taken a snowball and rolled it through more snow?  Like when you are building a snowman.  That small ball gathers more and more snow, and it becomes bigger and bigger.

But what if you have nothing left to sell and you would hate to break this momentum that you are feeling.

And then you get an idea.  Five months ago, you would never have thought of doing this.

What if….you canceled cable?  What if you canceled cable AND your home phone leaving you with cell and internet.  That would save you $125 a month.

But then the inner battle starts. What will you do in the evenings?  How will you watch football? What will the kids do when they get home from school?

Trust me; it will all work out in the end.  Everyone will adjust, and there are plenty of ways to fulfill those needs including accessing just about anything you want to watch online. Plus, the excitement will start to grow, just like that debt snowball rolling down the hill.

You will continue to look for ways to cut back so you can add to that debt snowball.  You use coupons at the grocery store, eat less meat, or plant a veggie garden.  And before you know it, you are paying $2,800 a month on that last car payment (if you haven’t decided to sell it for a more affordable option yet).

Debt Avalanche

Interest rates really chew on some people’s last nerve.  It really bothers them when they see that 24% interest rate on their Kohl’s card.  If they work on the greatest interest rate first, then think about the money they would save in the long run.  This might take you a lot longer than the snowball method.  Especially if your highest interest rate is attached to your most substantial debt.

There are benefits to working on that high-interest rate debt, but in the end, your desire to pay off these debts is going to be so great, you will pay these off fast that the interest won’t make much difference.  Play the mind game with yourself.  What do you have to lose?

(Debt – the answer is debt.  All.  The.  Debt!)

50/30/20 Method

This method is really worth adding to the options list.  It struck a chord for me not because of the allocations of your money (50% toward Must Haves, 30% towards Wants, and 20% towards Debt/Savings) but rather the WAY you get to decide which debt you pay off first.  I gave a complete review of the system and the book, All Your Worth here.

For me, this has made the most sense.  I have read a lot of personal finance books and many about getting out of debt but this resonated with the inner depths of my being.

It isn’t the debt snowball or debt avalanche theory.

Pay your debts off in the order in which you FEEL is the most important.  Which debt bugs you A LOT?  Which one keeps you up at night or makes moments FEEL awkward?

Here is a different order:

Aunt Dinah: $2,50 (zero interest)

Dentist: $1,250 (8% interest)

Car #1: $9,714.18 (6% interest)

Student loan debt: $15,987.23 (3% interest)

Kohl’s Card: $872.10 (24% interest)

Visa: $5,389.97

Car #2: $28,607.09

Paying off your aunt would sure make holidays easier.  As thankful as you might be, feeling like Aunt Dinah OWNES you does not make Christmas very comfortable.  And that dentist bill…that thing gives you almost as much pain as the root canal.  Every time you pay that bill, you think of the three days you ate chicken broth and applesauce!

Then there is that car that keeps giving you issues that you still owe almost $10,000 on.  If you could just go back in time, you never would have purchased that blue heap o’ junk!

See where I am coming from? This is how I would prefer to do it.  The way I would feel after I got each of those paid off would be a welcome feeling.  I am sure I would sleep better!


No matter how you decide to go about paying off your debt, just pick a direction and go for it!  Each person’s story is different and as I have said before, personal finance is just that, personal.







2 thoughts on “How To Destroy Debt: Debt Snowball or Debt Avalanche?”

  1. The one thing that pops into my head that is holding us back from achieving our goals: student. loan. debt. Oh my heavens, student loan debt.

    That said…we opted for the snowball – primarily because of a great opportunity that came up for us. We were essentially able to pause making full payments on the student loan, first completely, then making interest-only payments for what amounted to almost two years. During that time, we were able to pay off every other debt we had. Our time on the interest-only program ends in November, the same month we make our last payment on our credit line, freeing us up to just focus on the student loan.

    Anyway, this is an awesome post. I love seeing the different methods and approaches. You’re totally right – personal finance is personal 🙂

  2. I know those blasted student loans are awful, Tara but keep plugging away at them. Break them down into smaller chunks so you can SEE the progress! You got this!!!

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