The debt avalanche: crush your debt faster

By Rebecca Lake

Reviewed by James Heflin

Feb 19, 2024

Read time: 7 min

Happy childhood. Family time in winter, playing and laughing in the first snow.

Key takeaways:

  • The debt avalanche method could help you pay off debt and save money on interest. 

  • A debt avalanche focuses first on the debt that has the highest interest rate, regardless of the size of the debt. 

  • You can tailor your approach to debt by combining the avalanche method with other strategies.

Deciding to tackle your debt head-on is a significant step towards regaining control of your financial well-being. Every piece of information you gather now lays the groundwork for a brighter financial future. 

The debt avalanche method is a strategy that could align with your game plan. Let's explore this approach together. With some guidance and your ongoing commitment, you can navigate your way out of debt and closer to your financial goals. 

What is a debt avalanche?

The debt avalanche is a method of paying off debt that focuses on the cost of each debt. It's a cousin to the debt snowball method, which focuses on the size of each debt instead. 

First, you rank your debts by interest rate. You make the minimum payment on all of the debts except the one with the highest APR. On that one, you pay as much as you can. Once you pay off the first debt, you focus on the debt that has the next highest interest rate. 

The debt avalanche is appealing because by challenging yourself to tackle the most expensive debts first, you could end up paying less interest overall. 

How to do a debt avalanche: step-by-step guide

Here's how to put the debt avalanche method to work. 

  • List your debts. First, round up statements for all the debts you want to pay off. Make a list of each debt, including the balance, monthly payment, and annual percentage rate.

  • Order your debts. Next, put the debts in order from the highest APR to the lowest. It doesn't matter what the balance or monthly payment is; just focus on the interest rate.

  • Review your budget. The goal is to put as much money as you can toward the first debt on your list. Look at your budget to decide how much you can commit to that debt while still making the minimum payments on everything else. You could get rid of your debt faster if you spend less on other things.

  • Pay your debts. It's time to put the rubber to the road and start paying down your debt, beginning with the most expensive (highest interest) one. Keep paying the minimum for everything else.

  • Roll it over. You've paid off your first debt—congratulations! Now, take that payment and add it to the minimum payment for the next debt on the list.

  • Rinse and repeat. Keep rolling your payments over until all your debts are gone. 

That's all there is to it.

Leave debt behind, so you can move forward

Get rid of your debt and free up your cash flow without a loan or great credit.

Arguments for and against the debt avalanche method

Pro—You could save money. The debt avalanche is mainly designed to help you save money on interest. That's the biggest benefit, especially if you're paying double-digit rates on credit card debt or other debts. 

With steady payments, you could get rid of your debts about a month earlier with the avalanche method compared to the snowball method. So, the dollar amount you save would be in the neighborhood of one month's payment.

Con—You could lose steam. We humans like rewards. Your most expensive debt might be one of your larger debts. If it takes a very long time to reach the first debt payoff, your motivation could wane before you cross the finish line. Paying off debt, after all, takes some sacrifice and discipline, and it can be hard to keep putting one foot in front of the other. 

Is the debt avalanche method right for you?

To decide whether the debt avalanche is right for you, ask yourself whether it's more important to:

  • Save money on interest. If so, then consider the avalanche method.

  • Knock out a balance sooner. If so, try the snowball instead. 

The debt snowball method is similar to the debt avalanche except that you focus on the size of the debt and start with the smallest one, no matter what the APR is. That's the quickest way to get to your first debt payoff. The feeling of paying off a debt is highly rewarding. Wiping out your first debt could be just the power-up you need to energize your plan so you can go full steam ahead on the next debt.

Alternatives to the debt avalanche

The debt avalanche and debt snowball aren't the only ways to pay off debt.

Balance transfer

If you qualify, a credit card balance transferYou'll might help you cut your credit card APR to 0% for a short time (usually 6-21 months). You’ll save the most money if you pay off the balance before the regular APR kicks in. The problem is that the process may not be as straightforward as the advertisements would have you believe. If you still have a balance when the 0% APR ends, you might look for a new card to transfer it to. There are almost always fees to transfer balances. You might end up with more credit cards than you want. You might even run up new debt after you free up room on your old credit cards. The balance transfer strategy can turn into a juggling act that's harder and harder to manage.

Debt consolidation loan

A debt consolidation loan is a new loan to pay off more than one existing debt. It can make sense when you:

  • Qualify for an interest rate that's lower than the rate on your current debt(s)

  • Want to streamline your finances by reducing the number of monthly payments you make

  • Can get a monthly payment that's more affordable than the total of all the minimum payments you make now

  • Want a set payoff date for the debts that you consolidate (as opposed to minimum payments, which can drag on for years)

The most common ways to consolidate debt is with a personal loan or a home equity loan (if you own your home and have sufficient home equity). 

Debt resolution

If you're experiencing a financial hardship, your creditors might agree to let you resolve your debt for less than the full amount you owe. In other words, they may be willing to forgive a portion of your debt if you can't afford to fully pay it back. You can negotiate with creditors on your own or let a professional debt resolution company work out agreements on your behalf. Debt resolution only works for unsecured debts like credit cards and personal loans. 

Weighing all the options can help you figure out which approach to take. 

Tips for success with the debt avalanche

Making the debt avalanche work starts with having a solid budget so that you can maximize your payments each month. If you don't know how to budget yet, start practicing. You can use a free budgeting app to keep track of income and expenses. 

Here are some other tips for winning with the debt avalanche:

  • If you use a debit card to shop online, consider using a cashback app to earn a percentage back. Then, apply the cashback earned to your debt.

  • Use "extra" or "found" money like tax refunds or work bonuses to pay down debt.

  • Review your budget monthly to look for expenses to cut so you can apply more dollars to your debt.  

  • Put the brakes on spending with credit cards, and stick to cash or debit cards instead.

don'tYou don’t have to travel alone on your journey to debt freedom. Ask a trusted person to be an accountability partner. Chances are good that someone in your life also wants to reach financial goals. You could offer moral support to each other. At the very least, letting someone know what your goal is and how you're doing could help stay on track.  

What's next

  • Make a personal debt inventory of everything you owe, including the balance, monthly payment, and interest rate. 

  • Go over your budget to look for expenses you can trim to free up more money for debt repayment each month. 

Consider talking to a debt expert if you're feeling overwhelmed or unsure of the best way to approach paying off credit cards or other debts.

Rebecca Lake - Author

Rebecca is a senior contributing writer and debt expert. She's a Certified Educator in Personal Finance and a banking expert for Forbes Advisor. In addition to writing for online publications, Rebecca owns a personal finance website dedicated to teaching women how to take control of their money.

James Heflin - Author

James is a financial editor for Achieve. He has been an editor for The Ascent (The Motley Fool) and was the arts editor at The Valley Advocate newspaper in Western Massachusetts for many years. He holds an MFA from the University of Massachusetts Amherst and an MA from Hollins University. His book Krakatoa Picnic came out in 2017.

Frequently asked questions

There is no limit to the amount you can pay off with the avalanche method. It's possible to pay off all of your debt if you stick with it. Your success and timing will depend on how much you owe, your monthly budget, and how committed you are to the plan.

Debt stacking combines features of the debt snowball method with the debt avalanche method. The goal is to pay off the most expensive debts first, taking into account the balances you owe on each one. In other words, you might look at your three most expensive debts and start with the one that has the smallest balance.

The debt avalanche trumps the debt snowball when it comes to lowering the cost of the debt. You could pay less in interest using the avalanche vs. snowball method. However, the snowball method can give you some quick wins right away, which can motivate you to keep going. 

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Get rid of your debt and free up your cash flow without a loan or great credit.

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