Debt-payoff strategies
Compare the avalanche and the snowball: how soon you clear your debts and how much you overpay under each
Debt-free in
2 years 6 months
with the “Avalanche” strategy
Interest overpaid
224 166,59 ₽
interest over the whole term
Interest saved
35 893,30 ₽
avalanche vs snowball
Strategy comparison
| Metric | Avalanchehighest rate firstbest | Snowballsmallest balance first |
|---|---|---|
| Payoff time | 2 years 6 months | 2 years 7 months |
| Overpayment (interest) | 224 166,59 ₽ | 260 059,89 ₽ |
| Total paid | 844 166,59 ₽ | 880 059,89 ₽ |
Payoff order — “Avalanche”
- 1. Debt 1in 2 years 5 months
- 2. Debt 2in 2 years 6 months
The avalanche clears debts from the highest rate down — the least interest. The snowball goes from the smallest balance up: quick early wins. Both fit the same monthly budget.
Reference block: the method, a worked example and answers to common questions. It does not affect the calculation above.
How it is calculated
- Both strategies spend the same monthly budget: the sum of the minimum payments plus whatever you can pay on top. The only difference is the order — which debt receives the free money first.
- Each month the simulation accrues interest on every debt — balance * rate / 1200, rounded once, as a bank does — pays each its minimum, and throws the budget’s free remainder at the current target debt.
- The avalanche attacks the highest rate first — the mathematical minimum of interest. The snowball clears the smallest balance first: slightly dearer, but the first wins come quickly, and each freed minimum joins the budget.
- Each strategy reports the months to debt-free, the interest paid and the total outlay; the gap between the two is shown separately. A debt whose minimum cannot cover its own interest keeps growing until the budget reaches it — and a plan that never clears is honestly marked unpayable.
Worked example
The figures the page opens with: a card carrying 500 000 ₽ at 30% (minimum 15 000 ₽) and a loan of 120 000 ₽ at 12% (minimum 4 000 ₽), with 10 000 ₽ on top of the minimums. The total budget is 29 000 ₽ a month.
The avalanche clears both debts in 30 months with 224 166.59 ₽ of interest. The snowball kills the small loan in 10 months first, but totals 31 months and 260 059.89 ₽. The avalanche saves 35 893.30 ₽ and a month of living in debt.
Frequently asked questions
Avalanche or snowball — which should I pick?
The mathematics always favours the avalanche: the dearest rate first means less interest. Psychology often favours the snowball: a closed small debt keeps you going. When the gap is small, as in the example, pick the plan you will actually follow.
Why do both strategies spend the same budget?
Otherwise the comparison is rigged: the bigger sum would win, not the strategy. A fixed budget isolates the single variable — the order of debts — and prices the choice cleanly.
What does an “unpayable” debt mean?
Its minimum payment is below its monthly interest: the balance grows until the free budget reaches it. If the whole plan is marked unpayable, the minimums cannot cope — you need a bigger budget, or to refinance the expensive debts.
Where does the acceleration near the end come from?
Every cleared debt releases its minimum payment into the free budget, so the target receives ever more. That growing stream is the snowball effect — though it works in both strategies.
Wouldn’t refinancing first be smarter?
Often yes: cutting a rate from 30% to 20% shrinks interest more than any repayment order. Size a consolidation in “Refinancing”, then bring the resulting schedule back here. “Debt load” checks what the payments do to your budget.
How do I enter a credit card?
The current debt as the balance, the rate outside the grace period as the rate, the minimum payment from the statement (usually a few percent of the debt). While the card stays inside its grace period and is repaid in full, it does not belong in the plan.
Shouldn’t I repay the biggest debt first?
Size by itself does not matter — the rate does: a ruble at 30% grows faster than a ruble at 12% whichever debt it sits in. The biggest debt deserves the first attack only when it also carries the highest rate — and then it is simply the avalanche.