Debt Avalanche

The debt avalanche is the mathematically optimal way to pay off debt. You pay the minimum on everything, then direct every extra dollar at the debt with the highest interest rate. Once that one is gone, you move to the next-highest rate. Because interest is what makes debt grow, killing the most expensive debt first means less money lost to interest and the fastest payoff measured in dollars.

The downside is motivation. If your highest-rate debt also has a large balance, it can take a long time to see the first one disappear, and some people lose steam before then. That is the tradeoff with the debt snowball, which clears small balances first for quick wins at a slightly higher total cost. The right choice is the method you will follow to the end. Our debt snowball versus avalanche playbook runs the numbers on both so the cost difference is clear.