Psychology vs. Math
The debate between Snowball and Avalanche is the oldest argument in personal finance. The math says Avalanche wins every time. But the human brain runs on dopamine, not spreadsheets.
The Two Contenders
- ❄️ Snowball (Behavioral): Target the smallest
balance. Ignore rates. When it's gone, roll its payment into the
next one.
Why it works: Quick wins build momentum. You feel "success" sooner. - 🏔️ Avalanche (Mathematical): Target the highest
rate. Ignore balances.
Why it works: Reduces the Weighted Average Rate, saving total interest.
Mark had $100k in debt. He tried the Avalanche method for 2 years but felt like he
was making no progress on his giant $40k loan. He quit.
The Pivot: He switched to the Snowball, paid off a small $2k loan
in 3 months, and felt a rush of victory. That energy carried him to pay off the next
$5k loan. He finished debt-free 1 year *faster* than the Avalanche projection simply
because he actually stuck to the plan.
Strategy FAQ
Because personal finance is 80% behavior. Eliminating a specific debt completely reduces the number of bills you receive, reducing mental clutter and anxiety.
Yes. Knock out any tiny annoying debts (under $1,000) using the Snowball to clean up your dashboard, then switch to the Avalanche for the heavy lifting on high-interest loans.