The Debt Avalanche: A Better Way to Pay Off Debt?

The popularity of Dave Ramsey’s “debt snowball” method of debt reduction has led to a number of related debt reduction strategies related to winter precipitation, from snowflaking to the debt avalanche.

Some think that the debt avalanche is a better way to go, because it looks at the math involved in paying of credit card debt (and other debt), and helps you pay less overall — and get out of debt faster.

What is the Debt Avalanche?

The debt avalanche is, in reality, pretty much the same thing as the debt snowball.

The only difference is that with the debt snowball, you pay off your lowest balance first, and with the debt avalanche you start with your highest interest debt.

With the debt snowball, you might keep paying higher interest on your debt, because you are starting with your lowest balance.  When that higher interest is on a higher debt balance, it means that you pay more in interest over time, since your interest charges accumulate faster.

Paying off your debt with the avalanche system changes that.

Instead, you pay off your highest interest debt first.  Interest charges on your other debts accumulate at a slower pace, relative to the debt snowball.  As a result, you can get out of debt faster, and for less money.

Debt Snowball vs. Debt Avalanche: Motivation to Keep Going

debt_snowballOne of the reasons the debt snowball is so popular is due to the nature of the situation: You pay off your smallest debt first, so you receive the benefit of seeing fast results.

If your high interest credit card also has a high balance, it can take longer to reach the milestone of paying off your first card.  You might become discouraged and give up.

See, there’s a big psychological difference in the two.

For some people, the rational idea that over time they could pay less money and be done faster just doesn’t pack the emotional kick that paying off a credit card quickly does.

And many of us need that encouragement.  This is why the debt snowball method is so popular.

However, there are ways to motivate yourself with the debt avalanche method.

The easiest way is to create milestones that are unrelated to completely paying of a credit card.  (Of course, if your highest interest rate balance also happens to be your lowest balance, you are in luck.)

Instead of assuming that you have to pay off the card to be happy, set a different benchmark.  It could be paying off your first $2,500 of debt, or you could mark your halfway point with a celebration.

Creating such a rewards system with the debt avalanche combines your best rational strategy with an emotional strategy that can keep you going.  We all like to feel as though we are making progress, and the debt avalanche strategy can help you with that — as well as objectively help you pay off debt faster.


As you put together a plan for your debt reduction, consider your options, and the debt strategies available.  Be realistic about what you can accomplish, and consider using the debt avalanche.

Which do you prefer – the debt snowball or the debt avalanche?



Published or updated April 6, 2013.

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