Snowball vs Avalanche

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  • #3724

    Lately, I’ve been reading a lot about Dave Ramsey and his approach to getting out of debt. I’ve checked out some of his books from the library, listened to his podcast, and even convinced a friend of mine to let me borrow their Financial Peace University home version so I could see what all the fuss was about. After consuming, what I believe to be a decent amount of his content, a few things have stuck out to me.

    1.) Whether or not you agree with his approach or (questionable) investing advice, it’s hard to argue with his mantra of debt is dumb and cash is king. Having no debt and only buying what you can truly afford? That’s something I can get behind.

    The next point gave me a little more trouble, though.

    2.) The snowball method of paying down debt as the end all, be all. Here’s the thing, I understand the psychology around paying down debt from smallest to largest to get momentum going, but my brain just won’t let me overlook the financial benefit of paying down debt in order of highest interest rate.

    The avalanche method, as it’s known, accomplishes that but runs counter to everything that Dave preaches. I haven’t run the numbers, so I don’t know how much I’d actually be saving by choosing the avalanche over the snowball method, but it just makes sense that if the goal is to pay off debt, you’d want to follow the path that ends with you paying less in the long run. I would assume that to be the avalanche method, but I could be completely off.

    Any thoughts on why one method is better than the other?


    I’m such a huge Dave Ramsey fan it’s not even funny, but I can understand why you’d question this particular piece of advice. I see both sides of the issue, but I do think that psychologically there’s something to be said about paying off the smallest debt and watching as small debts get paid off and you start making progress. I don’t have much debt, but my husband and I are working the 7 baby step methods to a T right now. We paid off a small furniture loan (finally!), now we’re focusing on a small credit card, and then we’re going to tackle my car loan. After that, we’ll be debt free, except for our mortgage!


    I think Kayla hit the nail on the head when she said “psychologically.” People are different, so the right approach for one person might not be best for someone else… Maybe the avalanche method works for someone who is motivated by the emotional boost you get from seeing momentum build? But a different type of person, more mathematical or “rational,” might be more motivated by taking the avalanche approach? “Know thyself,” as the Greek philosophers say!


    Great conversation about best ways to tackle debt! I’d like to chime in just to mention SUM180’s approach, which is to tackle the highest-interest debt first, but also to balance this by building a savings cushion simultaneously. The two actions work together to strengthen your financial picture.


    I think his idea of living without debt is doable but not for most. If most people waited to buy things in cash (house, car, school, etc.) they may literally be waiting so long that they can’t enjoy it or may never obtain it. Income is a huge factor and sometimes you need that debt in order to make more money (business loan, school loan, house – wealth building).

    I think either debt pay down method is fine. I like snowball because of instant gratification and the avalanche method may disappoint my need to see instant improvement.

    To me it’s all individual and I’m not a fan of grouping people into the same methods and plans. Credit and debt is too specific to the person for that.

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