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Debt is our worst enemy, yet a lot of people have it. Life is expensive, so debt became necessary at some point. But being in debt is holding us back from our truest potential. We can’t afford to do the things we want to do because we’re left with so little after all the monthly payments.

We want to get out of debt, but it seems like it’s an impossible task. We’ve got payments going every which way, but enough is enough right? Something has got to give.

Have you make up your mind that you’re ready to tackle your debt head on? I have. But just how will we accomplish this?

Now introducing – the Debt Avalanche method…

White Snowy Avalanche

Debt Avalanche Explained

The debt avalanche method is one of the least talked about strategies to paying off debt. It consists of you paying your debt down from highest interest rate to lowest interest rate regardless of what the balance is.

Any extra money you can find in your budget is then thrown at the first debt until that debt is paid off. Then the minimum payment you were making on that initial debt along with the extra money you have is combined to go toward the next debt.

This process continues until all of your debt is paid off.

By using this method to pay off debt, you end up paying off your debt more quickly than starting with the lowest balance. But the greatest benefit is that you save yourself money in the long run because you’ll end up paying less interest over the course of your debt free journey.

Step 1: List out all your debts

Before you can develop an effective strategy to pay of your debt, you have to know what you’re working with. You have to really dig deep and lay it all out on the paper (or spreadsheet).

Even if you borrowed money from a family member or a friend, no matter how big or small the amount is – include that in your debt round up list.

Some of the most common debts you may have are personal loans, auto loans, student loans, credit cards, medical debt, payday loans and a mortgage.

You also want to check your credit report for any debts that you may have in collections.

TIP: You can get a free credit report from all 3 credit bureaus once every 12 months at

When you list your debt, you want to have the following columns: the creditor, interest rate, minimum payment and balance.

Vertex 42 has a great debt reduction calculator.

You can use this tool to list your debts, balances, interest rates and minimum payment. After putting the minimum payment as well as extra cash you have, it will then do calculations and determine the order of your debt payoff plan. It also will allow you to see when you will become debt free given nothing changes in the plan.

Step 2: Organize your debts in order from highest interest rate to lowest interest rate 

Again, with this method, you will not be focusing on the balance amount. You’re paying attention to the interest rate. Typically, your credit cards are going to have the highest interest rate.

This method is great for tackling that credit card debt. If you’ve never looked at your credit card statement, I challenge you to look at it. You can pull up the electronic version of your statement. Most statements have a box that shows you how much you will pay over time if you only make the minimum until the credit card is pay off. That amount will give you a kick in the butt to just start.

Step 3: Determine how much money you can afford to pay extra toward debt

The only way to actually know how much money you have to throw at your debt is to create a complete budget. You can get my free budget template below. It lays out most expected expenses a family has on a monthly basis.

You’ll be able to subtract your expenses from your income to determine if you have money left over or if you’re in the red.

If you’re in the red each month, this explains why your credit card balances keep increasing. The only way to really get out of being in the red is to decrease your expenses or increase your income.

Step 4: Continue making minimum payments on all your debts

Throughout this entire journey to paying off your debt, you’re going to continue making the minimum monthly payment on all your debts.

You’ll work aggressively on one debt at a time while continuing to pay the minimum payments on the remaining debts.

Step 5: Start paying your first debt with the money you came up with in Step 3

So essentially, you’ll be paying your minimum payment toward your debt PLUS any extra money you’ve found in your budget that can be put toward your debt.

Step 6: Once you pay your first debt off, use the extra money from Step 3 plus the minimum payment amount you were paying on your first debt and put both amounts toward the second debt

debt avalanche example

Step 7: Continue to repeat Step 6 until all of your debts are paid off 

Rinse and repeat until you’re debt free.

This method may not be a good fit for you if you find that you are easily discouraged. If you tend to thrive off of instant results, you may want to look into the Debt Snowball strategy.

With the Debt Avalanche method, it may take quite a while to pay off your first debt. Some people lose their momentum.

If you are laser focused on becoming debt free, this method is sure to help you get there sooner, and save you money while doing it.


Where are you in your debt free journey? Which debt pay off strategy are you using?

Overdue bills

Hey there, I’m Ozella!
It’s my goal to create a community of moms who are ready to get out of debt, budget better and create their dream life without money standing in the way.

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Ozella is a millennial wife and mom on a journey to financial freedom. Having grown up financially dumb, she learned the hard way and is now working her way out of debt. She uses The Intentional Dollar to share all that she is learning with others through her own journey.

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