Snowball: Pay minimum on all debts, then put extra toward the smallest balance. Builds momentum with quick wins.
Additional amount above minimum payments to accelerate debt payoff
| Payoff Order | Debt Name | Balance | Interest Rate | Min. Payment | Payoff Date | Actions |
|---|---|---|---|---|---|---|
| 1 | Personal Loan | $3,000 | 1,050.00% | $100 | — | |
| 2 | Credit Card 1 | $5,000 | 1,899.00% | $150 | — | |
| 3 | Car Loan | $12,000 | 599.00% | $300 | — |
Debt Distribution
Debt Snowball Method
Pay minimum on all debts, then put extra toward the smallest balance first. Once that's paid off, roll that payment to the next smallest debt.
Pros:
- Quick wins build motivation
- Reduces number of debts faster
- Psychologically rewarding
- Simplifies finances sooner
Best For:
People who need motivation from quick wins and those with multiple small debts.
Debt Avalanche Method
Pay minimum on all debts, then put extra toward the highest interest rate debt first. Once that's paid off, roll that payment to the next highest interest debt.
Pros:
- Saves the most money overall
- Mathematically optimal approach
- Reduces total interest paid
- Can lead to faster debt freedom
Best For:
People who are motivated by saving money and those with high-interest debts.
Tips for Successful Debt Payoff
Create a Budget
Track your income and expenses to find extra money you can put toward debt.
Find Extra Income
Consider a side hustle or selling unused items to accelerate your debt payoff.
Stop Adding New Debt
Put credit cards away and switch to cash or debit while paying off debt.
Lower Interest Rates
Call creditors to negotiate lower rates or consider balance transfers or consolidation.