Debt Snowball vs Avalanche, explained.
Debt snowball directs extra repayment to the smallest balance; debt avalanche directs it to the highest interest rate, after minimum payments.
Why it happens
Debts of 800, 2,000 and 5,000 have annual rates 18%, 8% and 24%. Each active debt receives up to 25 monthly, then the remaining fixed budget follows the selected priority with immediate reallocation.
Debt snowball directs extra repayment to the smallest balance; debt avalanche directs it to the highest interest rate, after minimum payments.
Read the result
Compare both schedules under the identical monthly budget. First payoff timing and total interest are separate outcomes.
A worked example
Allocate one budget across three debts
Inspect the three balances, rates and twenty-five-unit minimum payments before choosing a priority.
Pay several months under one rule and note when a complete debt disappears from the active list.
Compare complete plans under the same budget, without assuming the model captured motivation, fees or a changing income.
OPTIONAL DEEPER DETAILGo deeper: inside the model
Inside this model
Debts of 800, 2,000 and 5,000 have annual rates 18%, 8% and 24%. Each active debt receives up to 25 monthly, then the remaining fixed budget follows the selected priority with immediate reallocation.
Where this idea is useful
A practical use
Compare interest cost and first payoff timing separately before deciding which tradeoffs matter for a realistic repayment plan.
A common misconception
“The quickest first payoff must minimise total interest.”
Small balances can disappear quickly even when a larger debt has a higher rate. The two objectives need not select the same repayment order.
What this explanation leaves out
- Fixed rates, fixed minima and identical sustained budgets are assumed. No motivational benefit or personal financial recommendation is inferred; simulation caps at 240 months.
Does the model recommend a personal debt plan?
It compares declared arithmetic rules only. Actual minimums, penalties, cash-flow needs and sustained adherence can change a practical decision.
Are you optimising first completion, interest cost or a realistic ability to maintain payments?
Associated thinkers
Associations marked provisional are awaiting source review.
Further reading
Explore the original research or the teaching reference behind this experiment.