Avalanche vs Snowball: Which Is Better?
The avalanche method targets debts with the highest interest rate first, minimizing total interest paid. The snowball method targets the smallest balance first, giving you quick wins that build momentum. Mathematically, avalanche always saves you more money. Psychologically, snowball keeps you motivated. Both are dramatically better than paying minimums only.
Why extra payments matter so much
Credit card minimum payments are designed to keep you in debt as long as possible. On an $8,000 balance at 22% APR, paying only the minimum ($200/month) means you'll pay over $5,000 in interest and take nearly 6 years to pay it off. Adding just $100/month cuts that to under 3 years and saves you thousands.
Should you pay off debt or invest?
If your debt has a higher interest rate than your expected investment returns, pay off the debt first. Credit card debt at 20%+ should always be prioritized. Student loans at 5% are debatable — some people prefer to invest while making minimum payments, since the S&P 500 historically returns ~10%. There's no single right answer, but eliminating high-interest debt is almost always the best first move.