Debt Snowball vs Avalanche: Same Three Debts, Two Orders

• 1. The example
• 2. Snowball (smallest balance first)
• 3. Avalanche (highest rate first)
• 4. What the difference means
• 5. What matters more than the order
• Free tools

Both methods pay the minimum on every debt and put the extra on one target. The difference is which debt gets the extra first. Here is one example with real numbers.

§1. The example

• Card 1: $1,500 at 12% APR, minimum $40
• Card 2: $4,000 at 18% APR, minimum $100
• Card 3: $6,000 at 25% APR, minimum $150
• Total budget for debt: $600 a month

§2. Snowball (smallest balance first)

Order: $1,500, then $4,000, then $6,000. First debt is gone in about month 5. All debt is gone in about 25 months, with about $2,940 in interest.

§3. Avalanche (highest rate first)

Order: 25%, then 18%, then 12%. The first debt is gone in about month 16. All debt is gone in about 24 months, with about $2,390 in interest.

§4. What the difference means

Avalanche saves about $550 and one month here. Snowball gives a quick win in month 5. If an early win is what keeps you going, snowball can be worth the extra cost. If you’ll stick with the plan either way, avalanche costs less.

§5. What matters more than the order

The extra payment itself. Raising the budget from $600 to $700 a month does more than switching methods. Avoid adding new charges while paying down.

§Free tools

• Debt snowball vs avalanche calculator: https://smartbudgetsheets.surge.sh/calculators/debt-snowball-vs-avalanche-calculator/?utm_source=nostr
• Debt payoff spreadsheet (free CSV): https://smartbudgetsheets.surge.sh/templates/debt-payoff-spreadsheet/?utm_source=nostr
• Debt Payoff Planner, up to 8 debts (Payhip): https://payhip.com/b/PtBLU?utm_source=nostr
• 42 free budget templates, pay what you want ($0 is fine): https://smartbudgetsheet.gumroad.com/l/ngpkrb?utm_source=nostr

General information, not financial advice. Figures are rounded simulations.