What is the difference between the debt snowball and debt avalanche?
The snowball method pays off your smallest balance first for quick motivational wins, then rolls those payments onto the next smallest. The avalanche method targets the highest interest rate first, which mathematically minimizes total interest paid.
Which method saves the most money?
The avalanche method almost always saves the most interest because it eliminates your most expensive debt first. The snowball can cost slightly more in interest but helps many people stay motivated by clearing individual debts sooner.
Should I use snowball or avalanche if I am considering a consumer proposal?
If you cannot realistically repay your debts within a reasonable period even with the avalanche method, a consumer proposal or other insolvency option may be more appropriate. A Licensed Insolvency Trustee can review your full financial picture.
Does paying extra each month really help?
Yes. Any extra payment above the minimums goes directly to principal on your target debt, shortening the payoff timeline and reducing total interest under either method. Even modest extra payments compound into large savings over time.