A lot of people don’t realize there are actually two completely different strategies for paying off debt. Choosing the right one can make a significant difference in how quickly you eliminate your balances and it could potentially save you thousands of dollars in interest over time.
As a financial advisor, one of the most common questions I hear is:
“What’s the best way to pay off my debt?”
Two of the most popular strategies are the Debt Snowball and the Debt Avalanche. Each approach has its own advantages depending on your personality, motivation style, and financial goals.
Let’s break them down.
The Debt Snowball Method
The Debt Snowball strategy focuses on paying off your debts from the smallest balance to the largest balance, regardless of interest rate.
Here’s how it works:
- List all of your debts from smallest balance to largest balance.
- Continue making minimum payments on all debts.
- Put any extra money toward the smallest balance first.
- Once that debt is paid off, roll that payment into the next smallest debt.
As each debt gets eliminated, the amount you can apply toward the next one grows larger, like a snowball rolling downhill.
Why people like the Debt Snowball
The biggest advantage of this method is momentum and motivation. By paying off smaller debts first, you experience quick wins early in the process, which can help keep you motivated to stay consistent.
For many people, this psychological boost is what ultimately helps them stick with their debt payoff plan.
The Debt Avalanche Method
The Debt Avalanche strategy takes a different approach.
Instead of focusing on the smallest balance, this method prioritizes the highest interest rate debt first.
Here’s how it works:
- List your debts by interest rate from highest to lowest.
- Continue making minimum payments on all debts.
- Put any extra money toward the debt with the highest interest rate.
- Once that debt is eliminated, move to the next highest interest rate.
Why people like the Debt Avalanche
From a mathematical standpoint, the Debt Avalanche method is usually the most efficient strategy.
By targeting high-interest debt first, you reduce the total amount of interest you pay over time, which can potentially save you a significant amount of money.
Debt Snowball vs. Debt Avalanche: Which Is Better?
The truth is, both strategies can work extremely well — the best one depends on your personality and financial priorities.
You might prefer the Debt Snowball if:
- You benefit from quick wins and visible progress
- Staying motivated is your biggest challenge
- You want to see debts disappear quickly
You might prefer the Debt Avalanche if:
- Your goal is to pay the least amount of interest possible
- You’re disciplined and comfortable focusing on efficiency
- You want the mathematically optimal solution
The Most Important Part: Having a Plan
While people often debate which strategy is better, the reality is that either approach can be very effective.
The most important step is simply having a clear plan in place and staying consistent with it.
Paying down debt is one of the most powerful ways to improve your financial flexibility and move closer to your long-term goals.
Final Thoughts
If you’re unsure which approach makes the most sense for your situation, it can be helpful to walk through the numbers and create a personalized strategy.
If you ever have questions about your financial situation or want help building a plan, feel free to contact us at Paragon Wealth Management.
About Jeremy
Jeremy Kerr joined Paragon Wealth with nearly a decade of experience in the financial services industry. A graduate of Temple University’s Fox School of Business, Jeremy has always had a deep interest in personal finance and helping others make confident financial decisions.
He began his career in the mortgage industry, where he developed a strong foundation in lending and client service, before transitioning to a financial advisor role in 2023. At Paragon, Jeremy combines his technical knowledge with a genuine passion for building long-term relationships and guiding clients through all stages of their financial journey.
Outside the office, Jeremy enjoys spending time with family and friends, weightlifting, and playing basketball. To learn more about Jeremy, connect with him on LinkedIn.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor. Paragon Wealth Management and Great Valley Advisor Group are separate entities from LPL Financial.