Debt Payoff — Avalanche vs Snowball Method Calculated

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Overview

Two main strategies exist for paying off multiple debts. The avalanche method minimises interest; the snowball method maximises motivation. Here is the maths behind each.

The Formula

Avalanche: order by highest interest first | Snowball: order by smallest balance first

Standard formula used by professionals worldwide

Worked Example

Step-by-step

3 debts: 50k at 24%, 100k at 18%, 30k at 36% | Avalanche order: 36% → 24% → 18% (saves most interest)

Key Points

Accuracy: Results are as accurate as your inputs
Units: Always use consistent units throughout
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Frequently Asked Questions

Which method saves more money?

Avalanche always saves more in total interest. The difference can be substantial on high-rate debt.

Which method works better psychologically?

Snowball — quick wins from clearing small debts build momentum and adherence.

Can I combine both methods?

Yes — some people clear one small debt for motivation then switch to avalanche.

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