Both methods follow the same basic plan: pay the minimum on every debt, then throw every extra dollar at one target debt. When that debt is gone, roll its payment into the next one. The only difference is which debt you target first.
- Debt snowball: smallest balance first, regardless of interest rate.
- Debt avalanche: highest interest rate first, regardless of balance.
A worked example
Three debts, with $620 a month for debt in total ($370 of minimums plus $250 extra):
| Debt | Balance | APR | Minimum |
|---|---|---|---|
| Store card | $1,200 | 15% | $40 |
| Visa | $4,500 | 24% | $110 |
| Car loan | $8,000 | 7% | $220 |
We simulated both methods month by month (interest charged monthly, same $620 every month):
| Snowball | Avalanche | |
|---|---|---|
| Order | Store card → Visa → Car | Visa → Store card → Car |
| First debt paid off | Month 5 | Month 15 |
| Debt-free | Month 26 | Month 25 |
| Total interest | ≈ $1,825 | ≈ $1,707 |
The avalanche saves about $118 and one month. The snowball gives you your first win ten months sooner.
Which one should you choose?
Mathematically, the avalanche always costs the same or less, because the most expensive debt shrinks first. The gap grows when your highest-rate debt also has a large balance, and shrinks when rates are similar.
But debt payoff is a long game, and the best method is the one you'll stick with. Choose:
- Avalanche if you're motivated by numbers and can stay patient while a big balance slowly drops.
- Snowball if you need quick wins to stay motivated, or if you have several small balances you can clear fast.
- A hybrid: knock out one or two tiny balances first for momentum, then switch to the avalanche.
Make it work in a spreadsheet
A debt payoff tracker needs, for each debt: balance, APR, minimum payment and what you've paid so far. Useful formulas:
- % paid off:
=1-CurrentBalance/StartingBalance - Monthly interest:
=Balance*APR/12 - Months to pay off one debt:
=NPER(APR/12,-Payment,Balance). NPER works in both Excel and Google Sheets. - Debt-free date:
=EDATE(TODAY(),ROUNDUP(months,0))
Update balances once a month from your statements. Watching the % paid off climb is one of the best motivators there is.
Find the extra money first. The method matters less than the size of the extra payment. A 50/30/20 check or a monthly budget shows where it can come from, and 3-paycheck months are perfect for one-off lump sums.
This article is general education, not financial advice.