Personal finance guide
How to Pay Off Debt: Snowball vs Avalanche
Two common payoff methods are the debt snowball and debt avalanche. Both can be modeled month by month; they simply prioritize balances differently.
Debt snowball
Pay minimums on every debt and direct extra money toward the smallest balance first. When that balance is cleared, roll the freed payment into the next debt.
Debt avalanche
Pay minimums on every debt and direct extra money toward the highest-interest debt first. After it is cleared, redirect the payment to the next highest rate.
Why extra payments matter
Extra principal payments can shorten a payoff schedule and reduce the interest charged over time. The exact result depends on balance, rate, minimum payment and timing.
Compare the plans using your own numbers
The useful comparison is not a generic promise. It is the number of months and total interest under each method using the actual debts and payments in your plan.
Using The Wealth Flow
The Wealth Flow includes debt payoff planning with snowball and avalanche simulations, real interest accrual and extra-payment scenarios so you can compare the effect of a chosen payment plan.