Lesson 2 of 5

Debt snowball vs. debt avalanche: which one fits you

Once you're paying more than the minimum, the next decision is which debt gets the extra money first. Debt avalanche targets the highest interest rate debt first, while paying minimums on everything else -- mathematically, this saves the most money and time overall, since less of your payment goes to interest along the way. Debt snowball targets the smallest balance first, regardless of interest rate. It saves less money in interest, but the visible win of paying off an entire debt sooner is a real motivator for a lot of people, and a debt payoff plan that gets abandoned three months in saves nothing. There's no wrong answer here -- pick avalanche if the math motivates you and you can stay consistent regardless of visible wins, pick snowball if quick wins are what keep you going. Paycheck Planner's Payoff Plan page lets you compare both side by side with your actual debts, including the real payoff date and total interest for each, so you're choosing based on your numbers, not a guess.