Debt snowball vs avalanche: a worked example with real numbers
Most explanations stop at "smallest balance first" versus "highest rate first". Here are both methods run month by month on the same five debts, so you can see what actually changes: the order, the timing and the interest.
The debts
| Debt | Balance | APR | Minimum |
|---|---|---|---|
| Store card | 850 | 26.99% | 35 |
| Credit card | 4,200 | 22.49% | 110 |
| Car loan | 9,800 | 7.9% | 265 |
| Personal loan | 3,100 | 13.5% | 105 |
| Medical bill | 600 | 0% | 50 |
| Total | 18,550 | 565 |
On top of the 565 in minimums there is 300 extra a month, so 865 goes to debt every month in both plans. When a debt is paid off, its minimum joins the extra.
The result
The avalanche saves 233.36 and finishes one month sooner. The snowball pays off its first debt (the medical bill) in month 2; the avalanche's first win (the store card) comes in month 3.
Payoff order
| Snowball | Paid off | Avalanche | Paid off |
|---|---|---|---|
| Medical bill | month 2 | Store card | month 3 |
| Store card | month 4 | Medical bill* | month 12 |
| Personal loan | month 10 | Credit card | month 13 |
| Credit card | month 17 | Personal loan | month 17 |
| Car loan | month 25 | Car loan | month 24 |
*The 0% medical bill is last in line for extra money under the avalanche, so it simply runs out on its minimums.
The first four months of the snowball
| Month | Store | Credit | Car | Personal | Medical |
|---|---|---|---|---|---|
| 1 | 35 | 110 | 265 | 105 | 350 |
| 2 | 135 | 110 | 265 | 105 | 250 (paid off) |
| 3 | 385 | 110 | 265 | 105 | – |
| 4 | 356.88 (paid off) | 110 | 265 | 133.12 | – |
Watch the store card column: once the medical bill is gone, its 50 minimum plus the extra lands on the store card. That growing payment is the "snowball".
Which one should you pick?
If the interest gap is small, as here, the snowball's quick wins can be worth the extra cost because they keep you going. If you have one large, high-rate balance, the avalanche gap gets much bigger and is usually worth it. The only way to know is to run your own numbers.
For comparison, with no extra money at all (minimums only, with paid-off minimums still rolling over), the same debts take 42 months and 4,703.83 in interest. The 300 extra cuts about 17 months and roughly 2,300 in interest.
How the numbers were made: interest each month is APR ÷ 12 on the balance; card issuers usually calculate daily, so real statements differ a little. This is an example, not financial advice.
Keep reading
Sinking funds list · How to pay off credit card debt · Holiday budget plan · How to budget your money