Everything About The Debt Avalanche Method Of Paying Off Debt

Are you ready to pay off your debt but have no clue where to start? 

Read the first post in my series about paying off your debt, then read through this series until you get to this post, our eighth in the series.

Now that you know the details about the debt snowball, which offers a psychological boost in your debt pay off journey, it’s time we discuss another debt pay off method.

The second method I’d like to introduce is called the debt avalanche.

How The Debt Avalanche Works

The debt avalanche is very similar to the debt snowball method of paying off debt, with one major change.

Instead of paying off the loan with the smallest total balance first as the debt snowball method states, you’ll instead pay off the loan with the highest interest rate first.

The debt avalanche is seen as the logically optimal way to pay your debt off in the quickest manner possible.

By paying off the loan with the highest interest rate first, you’ll lower the amount of each payment that is applied to interest at a faster rate than you would with the debt snowball.

Each payment will result in more and more money being applied to actually paying down your principal, or the amount of debt that you owe.

If this is the quickest way to pay down you debt, you might be wondering why people advocate other debt pay off methods other than the debt avalanche. Let’s take a look at the pros and cons of this method.

Pros Of The Debt Avalanche Method

  • The debt avalanche will pay your debt off in the fastest manner possible.
  • You know your money is being put to the best use in your debt pay off journey.
  • You could save a ton of money in the long run by picking the debt avalanche over the debt snowball method.

Cons Of The Debt Avalanche Method

  • The debt avalanche can result in you waiting a long time to pay off your first loan. This can be a huge psychological blow.
  • People are emotional beings which can throw you off the path of the debt avalanche.
  • The difference between the debt avalanche and debt snowball may be minimal for your particular debt situation.

As you can see, the debt avalanche has financial advantages, but if you can’t stick to the plan then you might get yourself in trouble.

The debt avalanche is more advantageous when your loans that you owe the most on have the highest interest rates. If your highest interest rates are on your smallest balance loans then it doesn’t make as big of a difference.

Now that you understand both the debt snowball and debt avalanche methods and their pros and cons, we’ll discuss the other options you have when choosing a debt pay off method. Read more about it here.

If you’ve paid off debt in the past, did you use the debt avalanche? If so, do you see yourself as a more logical or emotional decision maker? I’d be interested to see if any emotional decision makers picked the debt avalanche method! Let me know in the comments below!

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About Lance Cothern

Lance Cothern, a Certified Public Accountant (CPA) licensed in the Commonwealth of Virginia, is the founder of Money Manifesto. You can read more about him here or connect with him on Facebook, Twitter, Google+ or Pinterest.


  1. We are debt snowballing our credit card debt, but we are going to debt avalanche our student loans and car loan next. We figure by the time we are done slowly paying off credit card debt, we will be able to hit hard the loans with a lot of force!

  2. The best thing a person can do when looking to pay off debt is to explore ALL their options and then make the right choice for them. The debt avalanche method is certainly a great option!

  3. Mortgage Free Mike says:

    I’ve always preferred the psychological route–the snowball. It can be hard to stay motivated about something like paying off a debt.
    However, I’ve never had a high interest rate. That might change my opinion.

  4. If you pay the smallest loan first, it cost the most money. BUT, your total monthly minimum payments may be less.

    I prefer to pay the highest interest rate and minimize interest.

  5. You’re right, the avalanche method will not give you a psychological advantage. I would recommend this strategy for someone who is very disciplined and mentally tough.

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