If you have more than one debt, you need a plan for where any extra money goes. The two best-known plans are the snowball and the avalanche. Both keep every minimum payment current; they differ only in which debt gets the extra.
The two methods
- Snowball: put extra money on the smallest balance first. When it's gone, roll its payment into the next smallest.
- Avalanche: put extra money on the highest interest rate first, then roll to the next highest.
In both, the monthly total you pay stays the same as each debt disappears, so the amount going to the remaining debts grows over time.
A worked example
Here are four example debts with $150 a month extra on top of the minimums ($645 total each month):
| Debt | Balance | APR | Minimum |
|---|---|---|---|
| Store card | $640 | 26.99% | $35 |
| Credit card | $3,200 | 22.49% | $95 |
| Car loan | $9,800 | 6.89% | $285 |
| Personal loan | $2,400 | 11.99% | $80 |
Assuming fixed rates, monthly interest and no new charges:
- Snowball: debt-free in 29 months, about $2,161 in total interest. The store card is gone in month 4.
- Avalanche: debt-free in 28 months, about $1,994 in total interest, roughly $166 less.
- Minimums only (no extra): 40 months and about $3,468 in interest.
In this example, the $150 extra matters far more than which method you pick.
How to choose
- Pick avalanche if your highest-rate debt is also a large one and you're motivated by the math.
- Pick snowball if you need early wins to keep going. Paying off a whole account in a few months can be a powerful motivator.
- Either way, the plan you actually follow beats the "perfect" plan you abandon.
Tips that help with either method
- Automate the minimums so nothing is ever late.
- Put windfalls (tax refunds, a third paycheck) toward the target debt.
- Check if your minimum payment covers the monthly interest. If it doesn't, the balance won't shrink; contact the lender about options.
- If debts feel unmanageable, a nonprofit credit counselor can review your options.
Run your own numbers
Our Debt Payoff Planner produced the example above. Enter up to eight debts, switch between snowball and avalanche, and see your own debt-free date and interest total. It works in Excel and free Google Sheets.
Figures are estimates for illustration. This article is general education, not financial advice.