Debt Payoff

Avalanche Debt Payoff Strategy

Paying off your debt can be a big challenge, and it only gets more complicated when you start accumulating more accounts (e.g., student loans, credit cards, and even medical bills). The biggest headache merely is devising a plan and applying a method that best works for you. A good financial plan includes a balance between effectiveness and personal motivation. The Avalanche is one well-known debt payoff strategy that is both effective and easy to apply.

Avalanche Method

If you have been increasing your minimum monthly account payments across multiple accounts, you may want to STOP! Statistically, the avalanche method is the preferred method to pay off debt quicker while paying less interest.

The Avalanche Method attacks one account at a time and prioritizes your debt payments by interest rates.

Here is how it works:

  1. List all your accounts in descending order by interest rates from high to low.
  2. Calculate how much you can pay above the minimum payment. You may want to budget your monthly expenses to see where you can save extra money.
  3. Pay as much extra money toward the account with the highest interest rate and only pay the required monthly minimum on all the other accounts.
  4. After paying off one account, then tackle the next account with the highest interest rate.


Use this Debt avalanche calculator from NerdWallet to help you get started!