Avalanche vs. Snowball Strategy

Avalanche vs. Snowball Method: Which is Right for Me?


It’s not all in your mind – prices on just about everything are climbing, fast. In part due to the aftermath of lockdowns and supply and labor shortages from the COVID-19 pandemic, the US inflation has peaked at a 40-year all-time high. 

Pile that 8%+ increase in the average cost of everyday necessities, from gas to groceries, on top of current bills and debt, millions of Americans are trying to gear up to shell out even more monthly debt repayments and expenses. Wouldn’t it be nice to accelerate the payoff timeline for some of those payments? 

With a bit of strategy, you can achieve the goal of living debt-free. But of course, not all debts are created equal. So which should you pay off first? The answer depends entirely on you and your goals. In this post, the Finance Opinion Team lays out two easy-to-implement strategies that can help you speed up the timeframe of your monthly bills, no matter where you’re starting from. 

First Things First: Face Your Finance Fears


We know it feels daunting, but the key to financial freedom is to get a good understanding of where you currently stand – which means you need to tally up your total debts. Take an inventory of everything you owe – from student loans and credit cards, to house payments, personal loans, and more. 

Next, tally up your monthly expenses. This includes rent or mortgage payments, groceries, utilities, and so on. Subtract this number from your total monthly income, and this will give you your monthly allowance for debt payments. 

Divide your total debt by this new monthly allowance to get a rough estimate of how much money you can afford to put toward debt repayments each month. Whew! You’re officially a math whizz =)

Select a Payoff Strategy

Now that you know how much you can afford to pay back each month, it’s time to choose a strategy to reach your debt-free goals – and stick with it! At Finance Opinion, our team is split between the Avalanche and Snowball Methods. And while both will help you accelerate your debt payoff, the approach you choose depends entirely on personal preference.

Team Avalanche Method

Debt Avalanche

The half of our team which prefers to pay down debt with the Avalanche Method like it for its top-down approach when it comes to interest. You start by making the minimum payment  on all outstanding debts each month, then use any of the remaining money (from the budget exercise we did earlier) to pay off the debt with the next highest interest rate first, thus saving you in overall interest payments.

Debt Avalanche Example:

$5,000 credit card bill with a 16% APR, a $20,000 student loan with a 5% interest rate, and a $3,000 personal loan that you used to get out of a jam a few years back at a 10% interest rate. 

Using the Avalanche Method, you would focus on paying down your highest interest loan first – the credit card bill – to save nearly half of the interest charges. For those with larger amounts of debt, the avalanche method can also reduce the time it takes to pay off the debt, helping you reach your debt-free goals faster.

Team Snowball Method

Snowball Strategy

The other half of us – team Snowball – love this approach because of the ability to celebrate small victories! With the Snowball Method, you focus on paying off small debts first, then “snowballing” into larger debts to tackle as you go. 

Invented by personal finance expert Dave Ramsey, the snowball method focuses on paying off your smallest debt balances first, while making minimum payments on all other debts.

Once your debt balance is paid off, you take the funds you had previously allocated to your smallest debt and put them toward the next-smallest balance, ie: “snowballing,” your repayments. 

Snowball Method Example:

Stemming off our previous example, the snowball method would instead have you focus on paying off your $3,000 personal loan first, then snowballing the minimum payments you would have dedicated to that debt to add to your credit card bill, then, finally, to your student loan.  

As we stated, the approach you choose to accelerating your debt payoff depends entirely on preference and your personal finance goals. 

And, finally, remember to celebrate your progress. While debt payoff can feel like a grind, even a small, consistent payment each month proves you’re working toward a larger goal, and that’s something to be proud of. 

Now which are you – team Avalanche or team Snowball? Let us know in the comments!



The opinions expressed in this post are for informational purposes only. To determine the best financing for your personal circumstances and goals, we advise you to consult with a licensed advisor.

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