Wiping out personal debt requires a strategic approach. Two primary methods dominate the landscape: the Debt Avalanche and the Debt Snowball. Both require you to pay the minimums on all your debts, but they deploy your extra budget to target different liabilities.
Debt Avalanche: The Mathematical Choice
The Avalanche method directs all extra payments to the debt with the highest interest rate (APR) first. Once that debt is fully settled, you roll its payment into the next highest interest rate account. This method is mathematically optimal, saving you the absolute maximum amount of interest and paying off your debt in the shortest theoretical time.
Debt Snowball: The Psychological Choice
The Snowball method ignores interest rates and targets the smallest balance first. Wiping out a small account quickly gives you a fast psychological win, triggering positive reinforcement. This builds momentum (the "snowball") that helps you stay committed. Choose Snowball if you need emotional quick-wins, but choose Avalanche if you have high-interest credit card debt that is compounding rapidly.
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