How to Pay Off Debt: Snowball vs Avalanche Method
How to pay off debt: list what you owe, choose the snowball or avalanche method, automate payments, find extra money, and when to get free debt advice.
Debt can feel overwhelming: several balances, different interest rates, and a sense that payments barely make a dent. A clear plan and a few steady habits make it manageable.
This guide covers how to pay off debt step by step, including the two most popular methods (snowball and avalanche) and the habits that keep you going. It’s part of our money habits guides.
Important: this is general information, not financial advice. If you’re struggling to make minimum payments, are being contacted by collectors, or are considering borrowing to repay debt, get free, independent debt advice from a reputable non-profit or government-backed service in your country before making decisions.
Step 1: List everything you owe
For each debt, write down:
| Debt | Balance | Interest rate | Minimum payment | Due date |
|---|---|---|---|---|
| Credit card A | ||||
| Credit card B | ||||
| Personal loan | ||||
| Overdraft |
Seeing it all in one place is uncomfortable, but it’s the foundation of a plan.
Step 2: Always pay the minimums
Missing minimum payments usually adds fees and can damage your credit. Set up automatic minimum payments on every debt first.
Step 3: Choose a method for extra payments
| Debt snowball | Debt avalanche | |
|---|---|---|
| Pay extra on | Smallest balance first | Highest interest rate first |
| Advantage | Quick wins keep you motivated | Usually costs the least in interest |
| Best for | People who need early momentum | People motivated by the numbers |
Mathematically, the avalanche method usually saves more interest. Some research on consumer debt suggests that paying off individual accounts can motivate people to keep going, which is the logic behind the snowball. The best method is the one you’ll stick with.
Step 4: Automate
Set up an automatic extra payment on your target debt each payday, like paying yourself first but for debt. When one debt is paid off, roll its payment into the next.
Step 5: Find extra money
- Review subscriptions and fixed costs.
- Plan meals to cut food spending; see meal planning on a budget.
- Try a no-spend challenge for a month.
- Use windfalls (tax refunds, bonuses) for debt.
Step 6: Stop adding new debt
- Remove saved cards from shopping sites.
- Wait 24 hours before non-essential purchases.
- Keep a small emergency fund, so surprises don’t go on credit cards.
Habits that keep you going
- A weekly money check of ten minutes: balances, payments, spending. See money habits.
- Track progress visually: a chart of total debt going down.
- Celebrate milestones (each debt paid) in small, free ways.
- Get support: a partner, a friend, or a free debt advice service.
Disclosure: Cohorty publishes this journal. Some people book a 30-minute Cohorty session for their weekly money check, alongside others doing their own admin, with no camera or chat. See how to use Cohorty.
When to get help
Contact a free debt advice service if:
- You can’t make minimum payments.
- Debt is growing despite payments.
- You’re borrowing to pay other debts.
- Debt is affecting your sleep, health or relationships.
Common questions
What is the fastest way to pay off debt?
Pay minimums on everything, then put all extra money on one debt at a time. The avalanche method (highest interest first) usually saves the most interest.
Is the debt snowball or avalanche better?
Avalanche usually costs less in interest; snowball gives quicker wins that help some people stay motivated. Choose the one you’ll stick with.
Should I save or pay off debt first?
Many people keep a small emergency fund while paying down high-interest debt, so surprises don’t create new debt. Free debt advice can help with your situation.
Where can I get free debt advice?
Look for reputable non-profit or government-backed debt advice services in your country. Avoid companies that charge high upfront fees.
