Debt Strategy
Snowball vs. Avalanche: Which Debt Method Actually Saves More?
Short answer: Avalanche saves money. Snowball saves psychology. The difference is often smaller than you think.
The Math (Example)
| Debt | Balance | Rate | Minimum |
|---|---|---|---|
| Credit Card A | €5,000 | 22% | €150 |
| Car Loan | €12,000 | 6% | €250 |
| Student Loan | €18,000 | 4.5% | €180 |
Extra budget: €300/month
| Method | Time to Zero | Total Interest | Difference |
|---|---|---|---|
| Avalanche (highest rate first) | 49 months | €4,890 | — |
| Snowball (lowest balance first) | 52 months | €5,240 | +€350 / 3 months |
€350 over 4 years. That's the "cost" of psychological wins.
When Snowball Wins
- You have 5+ small debts (medical bills, store cards)
- You've failed at debt payoff before — momentum matters
- The interest gap is <2% between debts
When Avalanche Wins
- High-rate credit cards (>18%) + lower-rate loans
- You're disciplined; want mathematical optimum
- Debt-free date matters more than quick wins
The Third Option: Hybrid
- Kill any debt <€500 immediately (psychological clear)
- Then avalanche the rest
Calculate yours
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