Which is Best: Debt Snowball or Debt Avalance?

You’ve decided you want to get free. What now?

As you start to tackle your debt, you’ve got a choice about whether to try paying more on all your various debts, or just to pay minimums on every debt apart from one, which you then crush, before moving on to the next one.

Across the personal finance community, that approach of focussing on one debt at a time is definitely favoured. The main benefit is that you can see how much of a difference you are making, as that one debt starts to shrink, and so you get excited and more confident. And so, when that one has been eradicated you move on to the next knowing that you money plan is working and that you’ve freed up more of your budget to crush the next one.

Which debt-crushing approach should I take?

You can use one of three approaches. All of them have you paying minimum payments on all your other debts, and focussing on a single one to pay it off as soon as possible, before moving onto the next.

Debt Snowball: list your debts smallest to largest, and work through them that way.

Debt Avalanche: you work through them in order of interest rate, getting rid of the highest interest one first.

The Off-Piste Method: you start with the one that p*sses you off the most!

There isn’t a right or wrong about which method you choose. The key is to pick the one that motivates you the most. If personal finances are 80% behaviour and 20% knowledge, then it’s all about doing the thing that will activate you the most!