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Now that you’ve made the decision to start your debt-free journey, where should you start? The next step involves finding a plan that will eliminate all of your consumer debt. If you scour the internet, you’ll stumble upon two popular debt payoff plans. Both deliver the same exact result (total debt elimination), but the plans vary slightly. The two most common debt payoff methods include the debt snowball and the debt avalanche plan.

In both methods, you’ll pay the minimum debt monthly payment on all of your debts. You’ll focus on one specific debt, paying as much as you can until it’s paid off. After that debt is paid, you’ll roll that payment to the next debt on your list. Continue rolling each debt payment to the next debt in line. Before you know it, you’ll be paying a large amount towards your final debt, and all of your debt will be eliminated in no time.

Similarities between Debt Snowball and Debt Avalanche

  • Pay as much as you can on one debt until it’s paid off while continuing to pay the minimum on all other debts.
  • Once the first debt is paid, roll that debt payment to the next debt until the next one is paid off.
  • Continue this pattern until all of your debts are paid.

 Difference between Debt Snowball and Debt Avalanche

The major difference between the two is the order in which you pay off the debt. In the debt snowball, you focus on the debt with the lowest balance first. The debt avalanche focuses on the debt with the highest interest rate, regardless of the debt balance. Both methods work as long as you stick to the plan.  Choosing the right one depends on your motivation, how fast you want to pay the debt off, and how much interest you’re willing to pay.

Debt Snowball or Debt Avalanche?

Picking the right debt payoff plan really depends on how you deal with long term situations. Follow the scenario below, and pick either option A or B to find out which plan will work better for you.

SCENARIO: You need to lose 50 pounds. You’re offered two different plans. Both plans use the same exact diet plan, but the results and the amount of exercise varies.  

  • Option A promises that you’ll lose 50 pounds in 6 months
  • Option B promises that you’ll lose 50 pounds in 8 months

So, most of you are probably wondering who, on earth, would pick option B? Yes, you’ll still lose 50 pounds in Option B, but it will take two months longer than Option A. Before you decide, let me now throw in the exercise requirements, and explain the expected results throughout the plan.

Option A

  1. Lose 50 pounds in 6 months
  2. Exercise 3 times a week
  3. No weight loss until after month 2, and sporadic weight loss throughout the plan

Option B

  1. Lose 50 pounds in 8 months
  2. Exercise 5 times a week
  3. Weight loss results almost immediately after you start, and consistently throughout the plan

Option A or B?

If you picked Option A, the debt avalanche might work for you. The debt avalanche focuses on paying the debt with the highest interest rate, regardless of the balance. Most financial experts believe this is the most logical method too. You’ll pay the debt faster with the least amount of interest. However, results may be slower in the beginning, meaning that you may not pay off a debt for quite some time. Most likely your highest interest debt is also your highest balance. If you’re able to stick to a plan knowing that you may not see immediate results, but you know that in the end you’ll save time and money, then this plan may work for you.

If you picked Option B, the debt snowball may be your best option. You’re motivated when you see results quickly, even if it will take a little longer and may require more work. You don’t mind paying more, as long as you pay off debt faster in the beginning. The debt snowball focuses on paying the debt with the lowest balance, regardless of interest rate. With this method, you’ll see results quickly and the momentum builds faster. If you need to see results right away to stick to a plan, then this plan may be your best choice.

Which method did we use?

For the most part, we used the debt snowball method. However, in the beginning, we chose to pay off one particular debt simply because of the payback incentive. As part of the loan contract, all interest would be credited back to us if the loan was paid in full before 18 months. Technically, it was the third-lowest debt balance at the time, but the chance to earn back all the interest was our motive. We had 5 months left before the incentive deadline expired. We focused on this debt first and paid it off one month before the deadline. Happily, we received over $500 in interest back which was used to pay off our lowest debt balance at the time, a financed iPhone.

Being able to pay off $6,500 in less than 5 months was mind-blowing to us. We had never made so much progress that quick. To say we were ecstatic is an understatement. We were shocked, amazed, but most importantly, motivated to stay on the plan. The momentum grew stronger as we rolled each debt payment to the next one in line. As we saw our debts disappear one by one, we gained even more confidence that the plan was working. Currently, we’re paying off our last debt and should be debt-free by the end of August. We can’t believe how much we’re paying towards debt each month. If you would have told me two and a half years ago that we would be able to pay this much towards debt, I would have laughed in your face. But I’m here to tell you that this plan works.

Debt Snowball Steps

  1. Total all debt balances, and list all minimum payments.
  2. Place your debt in order from smallest to largest balance.
  3. Calculate how much extra you can pay towards your debt. Use the results from your zero-based monthly budget.
  4. Pay the extra amount from step #3, towards the debt with the lowest balance. You’ll continue paying extra on this debt until it’s paid off. Roll the payment to the next debt until it’s paid off.
  5. Continue rolling each payment to the next debt until all the debt is paid off.
Debt Snowball Steps and Example


In the end, both the debt snowball and the debt avalanche will eliminate your debt. Choose the plan that works best for you and your family. I personally believe that staying motivated is the key to sticking to any plan. I personally remain positive and motivated when I see results. That’s why I recommend the debt snowball. Even though you’ll save more time and interest with the debt avalanche, the extra cash is not worth it if you give up along the way. Winning faster will keep you motivated on your debt-free journey. It has for me.

Please comment below which debt payoff plan you’re planning on to do.

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