Paying Off Debt: Which Method is Best?

Paying off debt can seem like a daunting task that could take forever to accomplish. Trust me, I’ve been there. At one point I had $25,000 in student loan debt, a car loan of $13,000, and about $6,500 in credit card debt. Yikes.

Paying off your debt will not only bring you financial freedom but will bring you a huge sense of accomplishment and stress-relief. Knowing that you owe money to someone else is a pretty terrible feeling to have.

There are two substantial ways to go about getting that debt paid off for good: the debt avalanche method, or the debt snowball method. I will note that the one thing these methods have in common is that they both involve listing out all of your debts and only make the minimum payments to all but ONE debt.

So what is the difference between the snowball and the avalanche methods?

The Debt Avalanche –

This method is basically paying off the debt with the highest interest rate first, regardless of the debt balance. This is the best method if you are looking to save money on interest payments. For example, let’s say you have three different debts:

  • $20,000 student loan at 12.99%
  • $10,000 car loan at 4%
  • $1,000 credit card debt at 8.99%

In this example, if you were going to choose the avalanche method, you would start by paying off the student loans first, while still making the minimum payments on the car loan and credit card debt.

After the student debt is paid off, you move onto the credit card debt and pay the same amount that you were paying towards the student loan debt directly to the credit card debt. This would save a lot of money in interest because you are tackling the highest interest loan first.

Here is a debt avalanche calculator so you can see how much interest you would be saving with this method.


The Debt Snowball –

This method is the opposite of the avalanche. You would start paying off the debt with the smallest balance first, regardless of the interest rates.

This could be a great method if you thrive on motivation and can stick to it by seeing immediate results.  Let’s take the same example from above:

$20,000 student loan at 12.99%

$10,000 car loan at 4%

$1,000 credit card debt at 8.99%

In this case, you would start by paying off the credit card debt first because it is the smallest debt that is owed. Then you would tackle the car loan, and then the student loan. This method shows you the instant progress you’re making and can help keep you motivated to tackle the next one.

This method, however, would end up costing you more money on interest rates. Here is a link for a debt snowball calculator for you to see how this would work for you.


So which method is best?

Honestly? It doesn’t really make a difference which option you choose. They will both get your debt paid off in around the same time-frame as long as you are making the minimum payments on all but one debt and tackling one debt at a time.

For me, I used the avalanche method to get my debts paid off. I feel that it is best to focus on the numbers and avoid paying as much interest as possible, regardless of the psychological impact.

The largest factor in deciding which method is best ultimately comes down to what will make you feel the most determined to continue paying off the debt. If that means saving interest payments, choose the avalanche method. If that means paying off the smaller debts first in order to tackle the larger ones, choose the snowball method. Both methods will get you to the same goal: no debt and financial freedom!

I would love to hear which method you would prefer to use and If you have tried either method before. Let me know in a comment!


Have you been trying to pay off debt so that you can start building financial freedom and wealth? Read here about the methods of paying off debt so that you can start saving and investing your money.

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