Guide · 2026-10-16

Debt snowball vs debt avalanche: which should you pick?

How the debt snowball and debt avalanche methods work, a worked example with made-up numbers, and a simple way to choose between them and track your progress in Google Sheets.

If you have more than one debt, you have a decision to make: which one gets your extra money first? The two best-known answers are the debt snowball and the debt avalanche. Both work. Both are simple. They differ in what they optimise for, and picking the one you will actually stick with matters more than picking the mathematically cheaper one.

This guide explains each method, walks through an example with made-up numbers, and shows how to track either one in a debt tracker spreadsheet.

This is general information, not financial advice. Your own situation, including any hardship options your lenders offer, may call for a different approach.

What the two methods have in common

Both methods start the same way:

List every debt with its current balance, its interest rate (APR) and its minimum monthly payment.
Pay the minimum on every debt, every month. Missing minimums costs fees and can damage your credit, so this part is not optional.
Decide how much extra you can put toward debt each month beyond the minimums, even if it is small.
Send all of that extra money to one target debt until it is paid off.
When a debt is cleared, take the money you were paying on it, its minimum plus the extra, and roll it onto the next target. The payment on your "attack" debt grows like a snowball rolling downhill.

The only thing that changes between the methods is step 4: how you choose the target.

The debt snowball

With the snowball, you target the smallest balance first, whatever the interest rate. You pay it off, then move to the next smallest.

Why people like it: you clear whole debts quickly, so you get early wins. Every cleared debt also removes a bill and a minimum payment from your life, which makes the monthly picture simpler and frees up cash. For many people, that sense of momentum is what keeps them going for months.

The trade-off: you may pay more total interest than with the other method, because a small balance can have a low interest rate while a larger balance quietly costs more every month.

The debt avalanche

With the avalanche, you target the highest interest rate first, whatever the balance. You pay that off, then move to the next highest rate.

Why people like it: it usually costs the least in interest and can get you to debt-free sooner, because you attack the most expensive money first.

The trade-off: if your highest-rate debt is also a large one, it can take a long time before you clear anything. Some people lose motivation during that stretch.

A worked example (made-up numbers)

Imagine three debts and an extra $100 a month on top of the minimums:

Store card: $400 balance, 12% APR, $25 minimum.
Credit card: $3,000 balance, 24% APR, $75 minimum.
Car loan: $6,000 balance, 7% APR, $180 minimum.

Under the snowball, the store card is first because $400 is the smallest balance. It gets its $25 minimum plus the extra $100, so it's paid off in a handful of months. Then its $125 rolls to the credit card, which has the next smallest balance.

Under the avalanche, the credit card is first because 24% is the highest rate. The extra $100 goes there, and the store card gets only its minimum. The credit card is cleared later than the store card would have been, but the highest-cost debt is gone sooner and total interest is lower.

These are invented numbers to show the mechanics, not a promise of what you would save. Your balances, rates and extra payment decide the real result, which is why it helps to run both plans with your own figures.

How to choose

A few questions can settle it:

Do you need quick wins to stay motivated? Choose the snowball. A method you follow beats a perfect one you drop.
Are you mostly motivated by saving money? Choose the avalanche.
Is there a big gap between your interest rates? If one debt is at 25% and the others are at 5%, the avalanche is likely to make a noticeable difference. If your rates are all similar, the snowball costs little extra and can feel better.
Is one balance nearly paid off? Finish it either way. A small, nearly-done debt is a cheap win.

There is also a middle road: start with the snowball to clear one or two small debts for momentum, then switch to the avalanche for the rest. Nothing says you must stay with one method.

Tracking it in Google Sheets

You can build a payoff plan by hand in a spreadsheet. A basic version has a table of debts (name, balance, APR, minimum), a column for the monthly interest (balance times APR divided by 12), and a schedule that, month by month, subtracts the payment and the interest from the balance. The challenge is the rolling-over logic: when one debt hits zero, its payment has to move to the next target. That's the part that is easy to get wrong in a hand-built sheet.

A ready-made debt tracker handles it for you. The Debt Payoff Tracker lets you list up to ten debts, switch between Snowball and Avalanche, type in an extra monthly payment and see your payoff order, a month-by-month schedule, your debt-free date and the interest saved. A progress tab lets you log each payment and your new balance so the plan updates as real life happens.

Habits that help whichever method you choose

Automate the minimums so you never miss one, then make the extra payment manually so you can adjust it.
Update your balances monthly. Interest and fees change the numbers, so the plan is only as good as your latest data.
Don't take on new debt while paying it down. It undoes the progress you're making.
Celebrate each cleared debt. It's a real milestone, and a small reward that fits your budget helps you keep going.
Review the plan after a raise, a bonus or a tax refund. An extra lump sum applied to your target debt can shorten the schedule more than you'd expect.

Limits worth knowing

A spreadsheet plan assumes your payments are on time and your interest rates stay the same. Variable-rate loans, promotional rates that expire and minimum payments that fall as your balance falls all change the real picture, so check the plan against your statements regularly. Google Sheets also won't pull in balances from your lenders, so you will type them in yourself.

When you are ready to try both methods with your own numbers, take a look at the Debt Payoff Tracker, or browse the other Small Business Basics templates.