Paying off debt feels easier with a clear plan. Two proven strategies — the avalanche and the snowball — both work by focusing your extra money on one debt at a time.
The foundation of both methods: always make the minimum payment on every debt to stay current, then put any extra money toward one target debt. When that debt is gone, roll its freed-up payment into the next one — the payment amount "snowballs" as you go.
The debt avalanche — lowest cost:
- Direct your extra payment to the debt with the highest interest rate first.
- Mathematically, this saves the most money in interest and is usually fastest overall.
The debt snowball — most motivating:
- Direct your extra payment to the debt with the smallest balance first.
- You eliminate individual debts quickly, and those early wins build momentum and motivation.
Which should you choose? The avalanche saves more money; the snowball can be easier to stick with. The best method is the one you will actually follow through on.
Other tools that can help:
- A balance transfer to reduce interest on credit card debt.
- Debt consolidation to combine multiple debts into one payment.
Whichever you choose, avoid adding new high-interest debt while you pay down the old.