Debt payoff
Both methods work the same basic way: pay minimums on everything, then throw every extra dollar at one target debt until it's gone, then roll that payment onto the next one. The only difference is which debt you pick first — and that difference matters more than it sounds.
Say you have a $500 balance at 22% APR and a $4,000 balance at 24% APR. Avalanche says attack the $4,000 balance first (higher rate), even though it'll take a while before you close out any single debt. Snowball says knock out the $500 balance first — you'll have one fewer debt to think about within weeks, even though the math is slightly less efficient.
The honest answer: avalanche wins on a spreadsheet. Snowball wins if you're the kind of person who needs an early win to stay motivated. The best method is whichever one you'll actually stick with — a mathematically perfect plan you abandon after two months is worth less than a slightly less efficient plan you finish.
Some people use a hybrid: if two debts are within a percentage point or two of each other, tackle the smaller balance first for the quick win, then switch to strict avalanche for the rest. You don't have to pick a purist version of either method.
The difference between the two methods depends entirely on your real balances and rates — generic examples only tell you so much. Money Therapy's debt payoff simulator compares both methods side by side using your actual debts, so you can see the real payoff date and total interest for each before choosing.
Take the free 2-minute check-upGet your path, then compare payoff methods with your real numbers