How to Use the Debt Avalanche Method to Pay Off Debt

Knowing how to pay off your debt isn't always easy, but there are strategies that can help. Two common methods are the debt snowball and the debt avalanche.

Debt avalanche involves paying off the debt account with the highest interest rate first. This plan may help you organize your payments while potentially reducing the amount of money you spend getting out of debt. But the avalanche method requires patience and persistence.

Debt avalanche vs. debt snowball

The debt avalanche and debt snowball are two ways to manage multiple debts. Both methods require making the minimum payment on each debt account, but they have different guidelines for choosing which debt to pay extra toward first.

Debt avalanche method

The debt avalanche method targets your debt with the highest interest rate first. This route may help you save on accrued interest over your debt payoff journey. But it can take a while to knock out the first debt. If you tend to be analytical and patient, the debt avalanche method may appeal to you.

» Learn about more ways to pay off debt

Debt snowball method

The debt snowball method, in contrast, prioritizes your smallest debt first, no matter the interest rate. Each time the smallest one is eliminated, you move to the next smallest. If you need short-term victories to inspire you, you’re a debt snowball candidate.

If you happen across "extra" money or take on a side hustle, you can supplement either payoff strategy by using the additional funds to further chip away at debts (the “snowflake” method).

How does the debt avalanche strategy work?

Add up all the minimums you must pay on your debt (excluding your mortgage) — ordered from the highest interest rate to lowest. Next, make a budget to see how much more than the minimums you can put toward your debt each month to accelerate your payoff. Put that amount toward your account with the highest interest rate each month until you wipe out that debt. Then, repeat the process with the debt carrying the next-highest interest rate.

Each time you eliminate a debt, add its minimum payment amount to the amount you’re paying toward the next debt on your list. If a promotional interest rate ends, you may have to reorder your debts to keep your focus on the one with the highest rate.

» Learn how to budget your money

Debt avalanche example

Let’s say you have a medical bill for $300, and the hospital is allowing you to pay it interest-free. You also have a credit card balance of $2,500 at 22.9% interest and another balance of $5,000 at 15.9%.

With the debt avalanche method, that $2,500 credit card balance becomes your top priority, because it carries the highest interest rate. If you can put an extra $200 toward paying off debt after making the minimum payments on all three, it will go to that highest-rate account until it is paid off. Then you add that debt’s minimum to the $200 extra, and put the total toward the bill with the second-highest interest rate. You’ll pay the medical bill last.

Is the debt avalanche method for you?

The debt avalanche method takes some patience — especially if your highest-interest debt also has the largest balance. But if you’re determined to get out of debt while spending the least amount possible on interest payments, sticking with this strategy can pay off.

You can build a spreadsheet to track your progress, which gives you the emotional payoff of watching your debt shrink, too. It's important to stay motivated. If you grow weary of the sacrifices you're making to pay off debt, you may decide it’s not worth the effort and quit. If you do that, all the money that you were going to save won’t matter.

The debt snowball method could be a better alternative if starting with a bigger debt seems too daunting.

» Stay on top of your debt with a debt tracker

If you can’t pay off your unsecured debts, such as credit cards and personal loans, in five years or less, you may need to investigate options for debt relief instead.