Which Debt to Pay Off First: A Simple Decision Framework
The best strategy is the one you stick with Don't spend time optimizing which method is superior. Pick one, set it up, and keep going. Consistency beats perfection every time.
You've got multiple debts. Where do you start? There are two main strategies. Pick one.
The Avalanche Method (mathematically optimal):
- List debts by interest rate, highest to lowest
- Pay minimums on everything
- Put all extra money toward the highest-rate debt
- When that's paid off, move to the next highest rate
Why it works: High-interest debt grows fastest. Killing it first saves the most money over time.
The Snowball Method (psychologically powerful):
- List debts by balance, smallest to largest
- Pay minimums on everything
- Put all extra money toward the smallest balance
- When that's paid off, move to the next smallest
Why it works: Quick wins keep you motivated. Paying off a whole debt feels great and keeps you going.
Which should you choose?
- If you're motivated by math and saving money: Avalanche
- If you need wins to stay motivated: Snowball
- If you're not sure: Try Snowball. Motivation matters more than optimization.
The truth: Both work if you stick with them. The worst strategy is the one you abandon.
WHAT TO DO TODAY:
- Look at your debt list (or make one—see our other article)
- Sort it two ways: by interest rate, then by balance
- Decide: Avalanche or Snowball?
- Circle your #1 target debt
- Find any extra money you can throw at it this month—even $20 helps
