Paying off debt can feel like a long and stressful journey, but it doesn’t have to be. With the right strategy, you can take control of your money, build momentum, and reduce financial stress one step at a time.
Two of the most popular debt repayment methods are the snowball and the avalanche. Each approach has its own strengths, and choosing the right one depends on your financial situation and what motivates you most.
What Is the Debt Snowball Method?
The debt snowball method is all about momentum and motivation. You start by paying off your smallest debt first, regardless of the interest rate, while continuing to make minimum payments on the rest. Once that first debt is cleared, you move on to the next smallest, adding the previous payment amount to the next one.
The idea is that by getting quick wins early on, you build confidence and motivation to keep going.
Example:
Let’s say you have the following debts:
- Credit Card A: $1,000 at 15%
- Personal Loan: $3,500 at 10%
- Credit Card B: $5,000 at 18%
Using the snowball method, you’d pay off Credit Card A first. Once that’s done, you’d apply that payment amount to the Personal Loan, and so on.
Pros of the Debt Snowball Method
- Quick wins help you stay motivated
- Builds confidence as debts disappear one by one
- Simple to follow, especially for those new to budgeting
Cons of the Debt Snowball Method
- You may pay more interest overall by focusing on balances instead of rates
- It may take longer to pay off high-interest debt
What Is the Debt Avalanche Method?
The debt avalanche method takes a more mathematical approach. You focus on the debt with the highest interest rate first, regardless of the balance. While you continue to make minimum payments on your other debts, you direct any extra money toward the one costing you the most.
Once the highest-interest debt is paid off, you move to the next highest rate, and so on. This method is designed to save you the most money in the long run.
Example:
Using the same debts:
- Credit Card A: $1,000 at 15%
- Personal Loan: $3,500 at 10%
- Credit Card B: $5,000 at 18%
The avalanche method would have you pay off Credit Card B first (because of the 18% interest rate), then Credit Card A, followed by the Personal Loan.
Pros of the Debt Avalanche Method
- Saves the most money on interest over time
- May help you become debt-free faster overall
- Focuses on financial efficiency
Cons of the Debt Avalanche Method
- Can feel slow if your highest-interest debt has a large balance
- May be harder to stay motivated without early wins
Which Method Should You Choose?
The best method is the one you’re most likely to stick with. If seeing fast results keeps you motivated, the debt snowball might be the way to go. But if saving money on interest is your top priority and you’re good at staying focused, the avalanche method could work better.
You don’t have to follow either method perfectly. Many people find success by blending the two—starting with the snowball for quick wins, then switching to the avalanche to save on interest.
The key is consistency. Whichever strategy you choose, stick with it, make extra repayments when you can, and track your progress to stay motivated. While these methods focus on eliminating personal debt like credit cards, personal loans, and car finance, it’s also worth noting that homeowners may consider more advanced strategies such as debt recycling in Australia to manage their mortgage while investing.
How This Fits Into Bigger Financial Goals
Once you’ve paid off your consumer debt, you can start focusing on long-term goals like saving, investing, or buying a home. If you’re already a homeowner and have equity in your property, you might explore more advanced strategies to make your money work harder.
One such strategy is debt recycling in Australia. It involves gradually turning your home loan (which is non-deductible) into investment debt (which may be tax-deductible). While this method doesn’t suit everyone—especially those still paying off consumer debt—it can be a powerful way to build wealth if your financial foundation is strong.
Debt recycling requires careful planning and advice from a financial professional, but it shows that once you’re debt-free, new doors open to grow your money in smarter ways.
Paying off debt is one of the most empowering financial moves you can make. Whether you choose the snowball or avalanche method, the most important thing is to start—and to keep going. Both strategies work when you commit to the process and keep your eyes on the goal.
There’s no one-size-fits-all answer, but by understanding your habits, preferences, and priorities, you can make a smart choice that fits your life. Over time, your debt will shrink, your confidence will grow, and you’ll be in a better position to plan for your future—whether that includes investing, saving, or exploring options like debt recycling.
No matter where you’re starting from, the path to financial freedom begins with a single step. Choose your strategy, take action, and trust the process.
