Money questions, explained
Debt snowball vs avalanche: worked example and tracking sheet
The snowball method targets the smallest debt first. The avalanche method targets the highest interest rate first. Both keep minimum payments going on every debt; the difference is where the extra payment goes.
Progress you can see, or interest you can avoid?
A small balance can disappear sooner under the snowball method, which some people find motivating. Prioritising the highest rate can reduce interest costs. The CFPB explains both approaches and the tradeoff between them.
Use a budget you can sustain after essential spending and required payments. Secured debts, arrears or threatened loss of housing need attention beyond a simple interest-rate ranking. If you cannot meet required payments, contact lenders or a qualified debt-advice service; this example does not resolve those situations.
Same debts, same €600 a month
| Debt | Balance | Annual rate | Monthly minimum |
|---|---|---|---|
| Small loan | €1,000.00 | 5% | €25.00 |
| Credit card | €4,000.00 | 22% | €100.00 |
| Car loan | €7,000.00 | 8% | €150.00 |
Minimums total €275. The remaining €325 goes to the chosen target. Once a debt is cleared, its payment stays in the €600 budget and moves to the remaining debts.
| Method | Months to clear all debts | Total interest | Total paid |
|---|---|---|---|
| Snowball | 23 | €1,345.70 | €13,345.70 |
| Avalanche | 22 | €1,185.68 | €13,185.68 |
In this example, avalanche costs €160.02 less interest. Snowball clears debts in this order: Small loan → Credit card → Car loan. Avalanche: Credit card → Small loan → Car loan.
The cheaper method in a model is useful only if its payment plan is affordable. This comparison does not promise the same saving for other balances or contracts.
What the calculation assumes
Interest is added at the start of each month using the opening balance × annual rate ÷ 12, rounded to cents per debt. Payments follow at month-end. Minimum payments stay fixed until the remaining balance is smaller. Any unused payment moves to the next debt that month; the final payment can be below €600.
There are no new purchases, fees, penalties, promotional rates, missed payments or rate changes. Real lenders may use daily interest and changing minimums. Check your statements and contracts rather than treating these schedules as lender quotes.
Download both example schedules to inspect every month.
Keep a debt tracking sheet
Record each balance, annual rate, required minimum, statement date and next payment date. Add a priority for the method you choose, then compare new balances at the next check-in. The CSV is a manual worksheet, not an automatic payoff calculator.
If extra repayment would use your cash reserve, read Should I pay off debt or save? first. Use the net worth guide to see the debts alongside your assets.
Wealth Watcher can keep dated liability balances in your personal balance sheet. The app is not being presented as a snowball or avalanche optimizer, and downloading this worksheet does not import it into the current App Store release.
Educational examples, not personalised financial advice. Check assumptions, local rules and product terms before acting.