Two Techniques for Paying Off Debt

People are different. There may not be a one-size-fits-all approach to debt elimination. Here are the two most popular methods to eradicate debt…

The two most popular ways to pay off debt are the debt snowball and the debt avalanche.

They are similar in their approaches, but the order in which debts are tackled is different.

Both approaches require a person to list all of their debts and the remaining balances, each loan’s interest rate, the monthly payments, and the due dates.

The debt snowball is focused on building psychological momentum by achieving quick victories. The debt avalanche is focused on minimizing the money lost to interest payments.

The debt snowball does this by having the consumer pay off the debts in order from smallest remaining balance to greatest. The debt avalanche, on the other hand, pays off the debts with the highest interest rates first.

As the debts are paid off, the money that was going towards the previous debt’s balance is put towards the next debt on your list.


An article at Investopedia explains the debt avalanche and gives a simple example:

The debt avalanche method involves making minimum payments on all debt, then using any remaining money to pay off the debt with the highest interest rate. Using the debt avalanche to pay off debt will save you the most money in interest payments. For example, if you have $3,000 extra to devote to debt repayment each month, then the debt avalanche method will make your money go the furthest. Imagine that you have the following debts:

$10,000 credit card debt at 18.99%

$9,000 car loan at 3.00%

$15,000 student loan at 4.50%

In this scenario, the avalanche method would have you pay off your credit card debt first, then allow you to pay off your remaining debt in 11 months, paying a total of $1,011.60 in interest. The snowball method would have you tackle the car loan first, becoming debt-free in 11 months, but you would have paid $1,514.97 in interest.

Just by switching the order of your debts, you can save hundreds of dollars in interest payments. For individuals with larger amounts of debt, the avalanche method can also reduce the time it takes to pay off the debt by a few months.


Investopedia also explains the debt snowball technique:

If the debt avalanche method is the best strategy to save money and time, then why have another debt repayment choice? The advantage of the debt snowball is that it helps build motivation for debt repayment. The debt snowball method involves paying off the smallest debts first to get them out of the way before moving on to bigger ones.

It’s not easy to get excited about debt repayment. Throwing large payments at your debt is even harder if you don’t see quick progress, and you could be prone to throw in the towel. “The math seems to lean more toward paying the highest interest debts first,” said financial expert Dave Ramsey. “But what I have learned is that personal finance is 20% head knowledge and 80% behavior. You need some quick wins in order to stay pumped enough to get out of debt completely.”

With the debt snowball method, you see instant progress and will be able to pay off a debt completely in only a few months. The debt avalanche will not work as effectively if you lose motivation and skip a month or two of strategic repayments.


The two techniques are both focused on paying off your debts as fast as possible. The debt avalanche will save you a little money in interest.

But the debt snowball helps achieve smaller, fast victories. This can be important for building habits. It may take just a few months to pay off the smallest debt, but the benefits are important. It helps the family readjust its budget. It helps them get into the “debt eradication at all costs” mindset. It helps them learn to budget and cut spending.

The debt avalanche method should have these benefits also, but the debt snowball will reward the efforts more quickly. This helps build momentum. For an individual or family that has been in debt for so long they thought they’d never be debt-free, these quick psychological victories may be just what they need.

On the other hand, some people may become maniacal about saving money. Once they realize they can make a plan to achieve debt-free status, they may be motivated by the prospect of saving as much money as possible.

What matter most is this: paying off the debt and achieving debt-free status. That should be the goal. The method chosen should be whichever one helps a family achieve that goal. In the long run, it may be worth the extra cost associated with using the debt snowball approach compared to the avalanche if it means the family sticks with the debt-reduction program.


Both the debt snowball and debt avalanche are powerful debt-reduction techniques. They both force a family to focus their household budget and organize their debts. This will establish good, long-term habits that will serve them well once they eliminate their debt.

The deacons need to be versed in both methods. They should draw up simple forms for consolidating the family’s debt information that can be printed out for cheap on a church or personal printer.

The deacons can assist a family in gathering and organizing this information in an afternoon at the church or for a few hours on a Saturday or after Sunday services.

Helping your member families get out of debt is one of the greatest blessings you can give them. “The rich rules over the poor, and the borrower is the slave of the lender” (Proverbs 22:7). The liberation of getting out of debt will help a family enjoy the benefits of their salvation to the fullest. Salvation in Christ is freedom from the bondage of sin. Being under the bondage of consumer debt is hell on earth: a person still under the curse of sin and earthly, short-run thinking. Salvation is about turning your gaze upward:

If then God has raised you with Christ, seek the things above, where Christ is sitting at the right hand of God. Think about the things above, not about the things on earth. For you have died, and your life is hidden with Christ in God. When Christ appears, who is your life, then you will also appear with him in glory.

Put to death, then, the members that are on earth—sexual immorality, uncleanness, passion, evil desire, and greed, which is idolatry. It is for these things that the wrath of God is coming.

Colossians 3:1-6