Two Proven Approaches
When tackling multiple debts, two strategies dominate: the avalanche method and the snowball method. Both work, but they suit different personalities.
The Avalanche Method
Strategy: Pay off highest interest rate debt first.
How It Works
- List debts by interest rate (highest to lowest)
- Pay minimums on all debts
- Put all extra money toward the highest-rate debt
- When that's paid, move to the next highest rate
Pros
- Saves the most money in interest
- Mathematically optimal
- Fastest path to debt-free (in dollar terms)
Cons
- Can take longer to see "wins"
- Requires discipline without quick rewards
The Snowball Method
Strategy: Pay off smallest balance first.
How It Works
- List debts by balance (smallest to largest)
- Pay minimums on all debts
- Put all extra money toward the smallest debt
- When paid, "snowball" that payment to the next smallest
Pros
- Quick psychological wins
- Builds momentum and motivation
- Fewer bills to manage sooner
Cons
- Costs more in total interest
- Can take longer overall
Which Is Right for You?
Choose Avalanche if:
- You're motivated by saving money
- You can stay disciplined long-term
- Your highest-rate debt isn't massive
- You're comfortable with math
Choose Snowball if:
- You need quick wins to stay motivated
- You've struggled with debt before
- You have many small debts
- Psychology matters more than math to you
The Hybrid Approach
Some people combine both methods:
- Pay off one or two small debts quickly (snowball)
- Then switch to avalanche for the rest
This gives you early wins while still optimising for interest savings.
The Most Important Thing
The best strategy is the one you'll actually stick to. A "suboptimal" snowball plan you complete beats an "optimal" avalanche plan you abandon.