Debt Avalanche vs. Debt Snowball


Let’s compare the 2 methods of how to pay off debt: Debt Avalanche vs. Debt Snowball. When I finally decided to get serious about paying off my student loans I had an overwhelming start. I had 5 separate loans: a direct loan with my university, 2 federal loans, and 2 private loans with my bank. Each loan had a different interest rate. Thankfully the direct loan with my university didn’t have interest, but the other loan interest rates ranged from 5.25% to 6.25%.

I’ve tried both methods (my preference will become apparent to you while I write about them), but let’s see what works for you. So let’s get started. You’ll be paying minimums on all your debts during this process.

The Debt Avalanche

List all your debts (student loan and consumer debt) by smallest to largest interest rate. Focus on the debt with the largest interest rate (aka your snowy debt mountain) and throw at it every dollar you can. Knock out the largest interest rate debt until it’s gone, then move on to the second largest, and so on and so forth. The goal here is to save money on interest.

I only lasted 2 months doing this! My loan with the largest interest is a beast; near $85,000 with a 6.25% variable interest rate. I was basically chucking pebbles at a Drogon (Game of Thrones reference)!

The Debt Snowball

List your debts from the smallest to largest amount. Focus on the debt with the smallest amount and throw at it every dollar you can. Paying off one debt will free up money to pay the next, thus your snowball gets larger. Throw that money snowball toward the second smallest debt, and continue this until you’re debt free! The goal here is to save your sanity.

Kidding, but not really. Although you may not save as much money in interest compared to the Debt Avalanche, you’ll be 20 times more motivated. My smallest loan was $7,000, which was more feasible to attack. Once each loan is out of your life, you can focus on the next. It’s addicting.

Do what works for you

I definitely had no patience during the Debt Avalanche. I’m a visual and tactile learner (read my blog post about learning styles here), and I felt like I wasn’t making productive moves. I saw very little progress trying to attack the Drogon loan. It was like watching paint dry; boring, no action, unmotivating, and makes you question your own existence while doing it. After sticking to the Debt Snowball for 6 months I was able to pay off 3 of the 5 loans. Yes! Hashtag winning! Hashtag so satisfying!

Debt is accepted as normal these days and the process of getting out of debt is NOT fun. Sure, I can afford to “live a little” every now and then, but most importantly I don’t want to drag these loans with me throughout the course of my life. After making such progress I finally felt like I gained control of my finances. There are factors in life you can’t control. However, you CAN control every aspect of your finances! I encourage everyone to take charge in paying off and staying out of debt!

Millennial Challenge

  • Which method works best for you: Debt Avalanche or Debt Snowball?

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Comments (3)

  • […] I’m on Baby Step 2, which is using the snowball method to pay off the remaining of my debt. Read about the debt snowball method vs. the debt avalanche method here. After doing this, I’ve successfully paid off 3 out of 5 student […]

  • […] My initial goal with consolidating was to reduce the number of student loans. It was overwhelming for me to see 10+ FedLoans, multiple Sallie Mae loans (I say multiple because I don’t remember how many!), 8 Wells Fargo loans, and 1 Heartland ECSI loan. The 10+ FedLoans were consolidated into one federal subsidized account and one federal unsubsidized account. The Sallie Mae and Wells Fargo student loans were consolidated into two, large Wells Fargo student loan accounts. I was unable to consolidate my WFB loan from two loans into one because of the total: ~$150,000. The two Wells Fargo loans could only be consolidated if the total is less than $120,000. The Heartland ECSI loan, a direct loan with my university, wasn’t consolidated into Wells Fargo because this loan had no interest and had a fixed rate of $83.33 per month. Instead of having 4 lenders with 19+ accounts, I consolidated into having 3 lenders with 5 accounts. A reason not to consolidate would be if you are using the debt snowball method. Having a greater number of loans with smaller totals may help you feel like you’re knocking your debt out sooner. Read about the debt snowball vs. the debt avalanche here. […]

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