The Debt Avalanche Method
The debt avalanche method prioritizes paying off your highest-interest debt first while making minimum payments on others. Mathematically, this is the fastest way to become debt-free and saves the most money in interest. Once the highest-interest debt is eliminated, you move to the next highest rate, creating an accelerating effect.
Compared to the debt snowball method, avalanche typically saves 5-10% in total interest and shortens payoff time by several months. For someone with $40,000 in debt, this could mean $2,000-4,000 in savings. The larger your debt and the greater the interest rate variation, the more avalanche outperforms snowball financially.
The challenge with avalanche is that your highest-interest debt may have the largest balance, meaning fewer early wins to maintain motivation. If you're analytical and motivated by numbers, avalanche is ideal. If you need psychological reinforcement, snowball might keep you on track better. Some people use a hybrid approach: snowball for quick wins on very small debts, then avalanche for the rest.
Quick Tips
- Always compare APR, not just interest rates
- Use the Rule of 72 to estimate doubling time
- Extra payments dramatically reduce total interest
Frequently Asked Questions
Typically 5-10% in total interest, depending on your debt mix. The greater the variation in interest rates and the larger your balances, the more avalanche saves compared to snowball.
This is common. Avalanche still saves the most money long-term, but it requires patience. Consider paying off one very small debt first for motivation, then switch to avalanche.
Yes, make all required minimums to avoid late fees and credit damage. The strategy only applies to how you allocate extra payment capacity above minimums.
Yes, but consistency is important. Many people start with snowball for motivation, then switch to avalanche once they've built momentum and paid off smaller debts.
Factor in the tax benefit when prioritizing. If you're in the 24% tax bracket and have a 6% mortgage, your effective rate is 4.56%. This often makes the mortgage lower priority than other debt.