Debt snowball or avalanche: which should you use?

If you have your list in front of you, every balance and rate in one place, the hard evening of writing it down is behind you. The next question is the order. Two methods get named more than any others, and the gap between them is often smaller than people argue.

The two orders

Both start the same way. You pay the minimum on every debt every month, then send one extra amount at a single target until that debt is gone. When it clears, its payment rolls into the next target, so the money aimed at your debt keeps growing while the list keeps shrinking.

The snowball sends that extra at your smallest balance first. A whole debt disappears early, and the list gets shorter fast.

The avalanche sends it at your highest interest rate first. You pay less interest along the way, though the first win can take longer to arrive.

What the choice costs

Say you have four balances, a mix a lot of households carry. $19,800 owed, minimums of $570 a month, and $250 extra found in the budget.

Both orders, run on those numbers, finish in the same month.

The avalanche saves $186 over 28 months, a little under $7 a month. The snowball clears a whole debt in month 3 instead of month 6. On these numbers, either method gets you out in 28 months.

The gap changes with the mix. With a $12,000 card at 24.9% next to a $3,000 personal loan at 3%, and the same $250 extra, the avalanche saves $988 and finishes a month sooner. The spread between your rates is what decides it. When your rates sit close together, the order barely matters. When one large balance carries a rate far above the rest, paying it first is worth real money.

Both projections assume no new charges, rates that stay put, and minimums held flat. Most cards drop the minimum as the balance falls, so paying only what the statement asks stretches the plan out well past these numbers.

Staying with it matters more than the method

The plan that works is the one you are still paying in month 20, when the novelty has worn off and the balance has not moved much since spring. Whether you keep paying matters more than which method you pick.

Paul wrote this to a church about doing good, and the harvest he means is bigger than a paid-off card. God has not promised any of us a payoff date. The verse still speaks to month 20, when you are tired and the balance has barely moved.

Proverbs sets diligence against haste, the hunt for one big move that clears everything at once. Most people pay off debt one ordinary payment at a time, over more months than they would like.

When the snowball fits

The snowball tends to fit if you have started a payoff plan before and stopped, or if seeing one debt end would keep you going. It also fits when several small balances could clear in the first few months and one less bill each month means more to you than the interest it saves.

Zechariah was speaking to people laying the foundation of a second temple, nothing next to the one their parents described, and God told them the hands that started it would finish it. A $900 balance closed in month three is a small start of that kind. It shows the plan works, and that matters in the months when nothing seems to happen.

When the avalanche fits

The avalanche tends to fit when one balance carries a rate far above the rest, especially a card above 20%, and the total is large enough that the interest gap runs to four figures. It suits people who have held a plan before and know they can go a year without a finish line.

A middle path

Some people clear the single smallest balance first for the encouragement, then reorder everything else by rate. That gets the early win and most of the savings.

Four things that matter more than the order

Holding off on new charges. New charges undo the payments you make.

Protecting the minimums. One late fee and a penalty rate can undo a year of careful ordering. If a payment is going to be missed, a call to the lender before the due date to ask about hardship options costs far less than the missed payment. If you have already missed several, it is still worth calling, and the next payment is a fine place to start again.

Giving the extra amount a name. Whatever you can send beyond the minimums works best as its own line in the budget. Money without a line usually gets spent on something else.

Giving while you pay it down. Setting a gift aside first, even a small one, keeps generosity in the plan. In a month with no dollars to spare, hours count too.

Jesus said this about money, and about small amounts of it. The $40 extra payment you make every month for two years matters more than which debt you aimed it at.

What the freedom is for

Paying off debt is a good goal. It can also take over, until the payoff date is the first thing you think about every morning.

It helps to picture what the freed-up money will do, like giving without checking the budget first, or saying yes when a family at church needs groceries. That picture can keep you going for 28 months when a shrinking balance alone will not.

Seeing both on your own numbers

In Kingdom Cents you can put in your balances, rates and minimums, add whatever extra you can send, and see the plan projected. Switching between the two orders shows the debt-free date and the interest each one costs. Your giving is tracked in the same app.

Keep reading: What does the Bible say about debt? and Should I tithe while I'm in debt? →