2 Strategies to Pay Off Your Debt – Snowball v Avalanche

Sometimes debt can feel like quicksand, no matter how hard you try to fight it, you just end up sinking deeper and deeper. You are not alone in this, 74% of Australian households reported debt between 2015-2016. But fear not, because today I’m going to show you two tried and tested methods for paying off debt and explain the pros and cons behind each of them to help you find the best approach to escape your debts.

Approach 1 – The Snowball

The Snowball Approach to paying off debt revolves around a simple premise – pay off debts based on their balances. You start with the debt that has the lowest balance. To successfully utilise this approach, allocate all of the money that you can afford towards this debt while paying the minimum amount on the remaining balances. By choosing the lowest amount, you will be able to tackle this debt a lot faster than other debts that may have greater amounts and interest rates.

While this is not the most cost-effective form of paying off debt, it has the added benefit of being able to physically conquer a debt quickly. Similar to a snowball rolling down a hill, the momentum that you build by continuously paying off your smaller debts can help you continue on your journey. This approach is fantastic for people who enjoy the positive reinforcement of reaching micro-goals, as you can visually see your progress. Think of when you have a list of chores that you have to do on the weekend. If you lack the motivation to do the big task, it can help when you do the smaller ones first like making your bed and brushing your teeth. The same applies to the Snowball Approach, hit your smaller debt goals first and continue until you have nothing remaining.


  • You see more immediate results by tackling the smallest balances first
  • Good for motivation and momentum
  • You may feel less stressed by having fewer forms of debt owing


  • You will pay more on interest
  • You will have a higher total of debt
  • It will take you longer to pay off the total debt

Approach 2 – The Avalanche

This approach is different because it doesn’t factor in the balance of your debts. Instead, this approach tackles the debt with the highest interest rate first, because this is the debt that is costing you the most amount of money per-dollar. To successfully utilise this approach, allocate all of the money that you can afford towards this debt while paying the minimum amount on the remaining balances.

While this method focuses on delayed gratification and may not give you the fast benefit of hitting your smaller goals, it statistically will save you more money in interest payments, as you will be clearing the most costly debt first. On paper, this approach is the superior one for this fact alone. However, this approach requires more willpower due to how frustrating it can seem to be throwing all of your money at a large sum and only seeing it chip away slowly.


  • You save more money and pay less interest
  • You pay off your debts faster
  • You are paying off the debt that is causing you the most financial strain


  • You don’t get the quick satisfaction of eradicating your smaller debts first
  • It can take a long time to pay off your higher-interest debt, causing emotional strain

Overall Verdict

This image is the property of American Consumer Credit Counseling (ACCC) 
No copyright infringement is intended.

Human beings are emotional creatures, it’s natural to struggle with the idea of paying off debts, particularly when the most rational choice (avalanche) can be the most frustrating and hardest option. If you have the mental fortitude to hit that higher interest debt, then the Avalanche is the superior approach to eliminating your debt. But if you feel that you need those small wins first to get you on the path to financial freedom, go with the Snowball approach. While it may not be as fast or effective as the avalanche approach, it’s more important that you make pragmatic moves to get out of debt and both approaches ultimately offer you that option.

At the end of the day it comes down to the approach that you can stick with, so think long and hard about which one you’re comfortable with and start making those steps to financial independence today.

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