Feeling weighed down by the burden of debt? You’re certainly not the only one.

Shockingly, the average American household is grappling with a debt load of over $96,371 – a staggering amount that includes everything from credit cards to student loans and mortgages (Experian, 2021). 

But fear not! With the right strategies, you can take charge of your finances and end the cycle of debt. Enter the snowball and avalanche methods, two popular approaches to help you get back on track. 

Both methods have advantages and disadvantages, making it important to understand how they work to determine which is the perfect fit for you. So, let’s dive in and explore how you can set yourself up for financial success!

Reduce Your Debt with the Snowball Method 

The snowball method aims to motivate you for a successful debt relief journey. First, you pay off your smallest debt, then move on to your next smallest one, and so and so on, building momentum like a snowball rolling down a hill and crushing all your debt beneath it.

  1. Step 1: Line ’em up! List all your debts from smallest to largest.
  2. Step 2: Make those minimum payments on all your debts to keep the creditors at bay.
  3. Step 3: Throw every spare penny at your smallest debt.
  4. Step 4: Celebrate as you pay off that smallest debt in full.
  5. Step 5: With that first debt vanquished, redirect all the money you were putting into it and shift your sights to the next smallest debt. It’s time to keep that momentum rolling!
  6. Step 6: Repeat, repeat, repeat! Follow this process, annihilating each debt in your path until they’re gone.

The snowball method isn’t about numbers and calculations. It’s about motivation and psychological wins. By targeting the smallest debts first, you experience a rush of accomplishment. This wave of positive energy propels you forward, even if the road ahead seems daunting.

But hey, let’s be real. The snowball method isn’t perfect. It is not the most cost-effective approach since you’re not prioritizing debts with the highest interest rates. In the long run, you might pay more in interest. Yet, the trade-off is the boost in motivation and the psychological push that keeps you on track.

Crush Debt with the Avalanche Method!

The avalanche method saves you money since you strategically pay off your high-interest-rate debts first cutting down on those pesky interest charges.

  1. Step 1: List your debts, arranged from the highest interest rates to the more forgiving ones.
  2. Step 2: Make those minimum payments on all debts.
  3. Step 3: Put any extra bit of money you have at the debt with the highest interest rate until you pay it off.
  4. Step 4: Feel the rush of victory as you eliminate that high-interest debt from your life.
  5. Step 5: Redirect the financial force previously used to pay the highest-interest debt and target the next one in line.
  6. Step 6: Rinse and repeat. Keep repeating until every last debt has been paid in full.

It’s all about the numbers. By tackling the high-interest debts first, you’re mathematically optimizing your debt repayment journey. This strategic approach saves you substantial sums of money in interest charges over time, making it a truly cost-effective path to financial freedom.

However, let’s acknowledge the trade-offs. The avalanche method does not offer the immediate victories and bursts of motivation that the snowball method provides. It can feel like a slow burn, especially if you’re dealing with sizable high-interest debts that take time to conquer. The lack of quick wins can be discouraging, even though you’re on track to saving significant money in the long run.

Which Debt Payment Plan Is Right for You?

When it comes to conquering your debts, the ultimate strategy is one that aligns perfectly with your unique circumstances and personality. Are you surrounded by a swarm of smaller debts, feeling overwhelmed and unsure where to start? Or do you need motivation to keep going on your debt journey. Either way, give the snowball method a try. It will help you build momentum and give you the positive reinforcement you need to continue.

Is your primary concern saving money? Then the avalanche method is for you. This strategy will save you on interest charges and lead you down a clear path to financial freedom.

Here’s the twist: You don’t have to choose one. Instead, combine elements of both methods to craft a strategy tailored to your needs. For example, start with the snowball method and topple your smaller debts for quick wins and a confidence boost. Then, once you’ve gained momentum, switch to the avalanche method and save money on interest charges. It’s the perfect fusion, designed to optimize your journey to financial freedom. 

But no matter which path you choose, the key lies in unwavering commitment and consistent progress. Try a method; if it doesn’t quite click, switch it up until you find the one that does. Remember, debt reduction is a long-term journey toward financial freedom and a brighter, more secure future.

About the author

Rachel Alulis

Rachel Alulis has been the lead editor for Moneyfor’s credit cards team since 2015 and for the financial rewards team since 2023. Before joining Moneyfor, Rachel worked at USA Today and the Des Moines Register. She then established a successful freelance writing and editing business specializing in personal finance. Rachel holds a bachelor’s degree in journalism and an MBA.