The Challenge of Multiple Debts
Whether it's a personal loan, a credit card balance, a student loan, or an EMI on a consumer appliance — carrying multiple debts at once can feel overwhelming. The most common mistake people make is paying random amounts on random debts without a strategy. That leads to slow progress and a lot of wasted interest.
Two proven methods can cut through the confusion: the Debt Avalanche and the Debt Snowball. Both work. The difference is in how they keep you motivated and how much interest you'll pay overall.
The Debt Avalanche Method
With the avalanche method, you focus on paying off the debt with the highest interest rate first, while making minimum payments on all others. Once the highest-rate debt is cleared, you roll that payment into the next highest-rate debt, and so on.
Why It Works
- Mathematically optimal — you pay the least total interest over time.
- Faster overall payoff if you stay disciplined.
- Best for people who are motivated by numbers and long-term efficiency.
Example
| Debt | Balance (৳) | Interest Rate | Payoff Priority |
|---|---|---|---|
| Credit Card | ৳30,000 | 24% | 1st |
| Personal Loan | ৳80,000 | 16% | 2nd |
| Student Loan | ৳150,000 | 9% | 3rd |
The Debt Snowball Method
With the snowball method, you focus on paying off the smallest balance first, regardless of interest rate, while making minimum payments on everything else. As each small debt disappears, you gain momentum and confidence to tackle the next one.
Why It Works
- Provides quick wins that keep you emotionally motivated.
- Reduces the number of accounts you're managing faster.
- Best for people who need visible progress to stay on track.
Example (Same Debts, Different Order)
| Debt | Balance (৳) | Interest Rate | Payoff Priority |
|---|---|---|---|
| Credit Card | ৳30,000 | 24% | 1st |
| Personal Loan | ৳80,000 | 16% | 2nd |
| Student Loan | ৳150,000 | 9% | 3rd |
(In this case both methods coincidentally start with the same debt — but that won't always be true.)
Avalanche vs. Snowball: Which Should You Choose?
| Factor | Avalanche | Snowball |
|---|---|---|
| Total interest paid | Less | More |
| Time to be debt-free | Potentially faster | Slightly slower |
| Emotional motivation | Lower early on | Higher (quick wins) |
| Best for | High-interest debtors | People needing momentum |
Tips to Accelerate Any Debt Payoff Strategy
- Find extra income. Freelance work, selling unused items, or overtime can go directly toward debt.
- Cut one discretionary expense. Even redirecting ৳1,000–2,000 per month speeds things up significantly.
- Avoid taking on new debt. Pause credit card use until existing balances are cleared.
- Automate minimum payments. Avoid late fees by setting up autopay on all accounts.
- Celebrate milestones. Acknowledge each paid-off debt — it reinforces the habit.
The Bottom Line
Both the avalanche and snowball methods work — the best one is the one you'll actually stick to. If high interest rates make you anxious, go avalanche. If you need early wins to stay motivated, go snowball. What matters most is that you have a plan and follow it consistently every month.