Debt Payoff Example
Debt Snowball Method — Step-by-Step Example
See how the debt snowball method works with a 3-debt scenario.
Scenario
3 debts: $2k at 18%, $8k at 14%, $15k at 10%. Extra $300/month.
Inputs
Debt 1$2,000 at 18%
Debt 2$8,000 at 14%
Debt 3$15,000 at 10%
Extra payment$300/month
Results
Debt 1 cleared~7 months
Debt 2 cleared (with snowball)~30 months
Debt 3 cleared (with snowball)~52 months
Total interest paid~$6,800
Explanation
Snowball: attack smallest balance first (Debt 1), then roll that payment to Debt 2, then Debt 3. The psychological wins keep you motivated. Compare to avalanche (highest rate first) — the math favors avalanche but the behavior favors snowball.
Key Takeaways
- Avalanche saves ~$1,200 more in this example — but only if you stick with it.
- Neither method works if you keep accumulating new debt.