When it comes to paying off debt, there’s no one-size-fits-all solution. What matters most is choosing an approach that fits your financial situation and keeps you motivated.
As part of VyStar’s Debt Payoff Challenge, we are encouraging members to take practical steps toward becoming debt-free. Two of the most effective strategies are the Snowball Method and the Avalanche Method.
What do those strategies look like in action? Let’s take a closer look.
The Snowball Method: Build Momentum With Quick Wins
The Snowball Method focuses on paying off your smallest balance first, while continuing to make minimum payments on all other debts. Once the smallest balance is paid off, you roll that payment into the next smallest debt.
For example: Jennifer has $300 each month she can put toward debt beyond her minimum payments.
Her debts include:
Retail credit card: $600 balance at 19% APR, $35 minimum
Rewards credit card: $1,500 balance at 24% APR, $55 minimum
Auto loan: $9,000 balance at 6% APR, $225 minimum
Jennifer directs her extra $300 toward the $600 retail card.
Total payment toward that card: $335 per month
The balance is paid off in about 2 months
She then applies that full $335 toward the $1,500 rewards card, in addition to the minimum payment.
Total payment toward that card: $390 per month
The balance is paid off in about 5 months
In just seven months, Jennifer has eliminated two debts. She then applies that same momentum to her auto loan, reducing the principal faster and shortening the loan term.
Quick payoffs create motivation. Seeing balances disappear early can make it easier to stay committed, even if this method may result in paying slightly more interest overall.
The Avalanche Method: Save More on Interest Over Time
The Avalanche Method prioritizes debts with the highest interest rates first, regardless of balance size. This approach minimizes the total interest paid over the life of your debt.
Example: Michael also has $300 per month available beyond minimum payments.
His debts include:
High-interest credit card: $3,000 balance at 26% APR, $90 minimum
Standard credit card: $4,500 balance at 18% APR, $135 minimum
Personal loan: $7,000 balance at 9% APR, $160 minimum
Michael directs his extra $300 to the 26% credit card.
Total payment toward that card: $390 per month
The balance is paid off in about 9 months
Once that debt is gone, Michael rolls the full payment into the 18% credit card.
Total payment toward that card: $525 per month
The balance is paid off in 9-10 months
He then applies the combined payment to his personal loan, significantly reducing the remaining balance and the total interest paid.
Although it takes longer to see the first payoff, the Avalanche Method can save hundreds or even thousands of dollars in interest, making it ideal for members focused on long-term savings.
Choosing the Right Strategy for You
Paying off debt is a journey, and the best method is the one you’ll stick with consistently. While the examples above illustrate what’s possible, timelines are estimates based on monthly interest accrual and fixed minimum payments. Actual results may vary depending on factors like daily compounding, fees or changes to minimum payments.