If you're carrying multiple debts — credit cards, a personal loan, a car payment — figuring out which to pay off first makes a real difference. Two strategies dominate the conversation: the debt snowball and the debt avalanche. They use the same basic mechanic but approach it from opposite ends.

The Debt Snowball: Start Small, Build Momentum

With the snowball method, you list your debts from smallest balance to largest and throw every extra dollar at the smallest one while making minimum payments on everything else. Once the smallest is gone, you roll that payment into the next-smallest. Psychologically, clearing a debt quickly — even a small one — delivers a win that keeps you going.

Research backs this up. A Harvard Business Review study found that people who focused on one account at a time paid off debt more successfully than those who spread payments evenly — regardless of interest rates.

The Debt Avalanche: Minimise Total Interest Paid

The avalanche method targets the debt with the highest interest rate first, regardless of balance size. Mathematically, this is optimal — you pay less in total interest and get debt-free faster in terms of total dollars spent. The downside is that high-rate debts often have large balances, meaning early wins can be slow to arrive.

Which One Should You Choose?

Choose the avalanche if you're highly motivated, comfortable with delayed gratification, and want to minimise total cost. Choose the snowball if you've struggled to stick to debt payoff plans before, need early wins to stay engaged, or your debts are relatively similar in interest rates.

The best strategy is the one you'll actually follow for the months or years it takes to finish. A slightly suboptimal plan executed consistently will always beat the perfect plan abandoned after three months.