Snowball (or Avalanche)

Posted on May 4, 2017


I’ve been working with Lillian of to build a plan to attack my personal debt. She’s given me a number of tools and answered a bunch of questions but one choice is up to me to make.

Snowball or Avalanche?

Snowball and Avalanche are two ways to prioritize debt. The Snowball strategy is to attack the smallest amounts first in order to create some wins for yourself. The Avalanche is to attack the highest interest first because that is smarter. It’s sort of a choice between emotion and intellect and since I’m torn between the two I’m letting the shareholders decide.

Of course this choice would be easier if I revealed more information about my personal debts but the whole point of working with Lillian is to have someone I can trust without revealing the actual numbers of my personal finances. So I’m asking you to make this vote more in the abstract. Which concept is more appealing to KmikeyM?

This proposal will be for Snowball. A yes vote means attack the smallest debt first. A no vote will be in support of Avalanche, which saves money!

Past Discussion

Dokken841 (2.0 shares, voted no)
egli (5.0 shares, voted no)
People say you should snowball because the earlier victories are more motivating, but that seems like a problem you could fix with technology: maybe a spreadsheet where you can tell it how much extra you're paying and it computes how much you're saving yourself in future interest payments.
KevinRudd (1.0 shares, voted yes)
Take it from a former Prime Minister, losing motivation is the biggest problem, when taking on something as large as getting rid of debt. Taking the Snowball method will give you easy wins early on, and show you the benefits of beating down your debt. There are other ways to get this motivation in the Avalanche method, but they are mainly artificial, and do not provide the same kind of pressure relief. The interest accrued on the Snowball method may mean it is extra money in the long run, but I believe this will be more than easily offset by the boost in motivation, and overall productivity of KmikeyM.
jrg3 (0.0 shares)
I think as long as you have someone backing you up (stockholders AND Lillian), there is little risk of failure. Plus I've calculated the numbers myself for many cases; avalanche all the way!
Douglas Dollars 💯 (415.0 shares, voted yes)
Snowball worked for me in clearing more than $30,000 in debt over the course of a year. Little victories, AGGRESSIVELY closing out zeroed cards/accounts (to prevent possible relapse), and rolling payments up to the next-smallest card kept me actually enjoying this process. This one wins for me, because throwing a spare $10 (then $50, $100, etc) at smaller debts _feels_ highly impactful, whereas throwing the same at Avalanche barely makes a dent. The aim is to kill it so fast that any money 'saved' through Avalanche feels weak in comparison to the raw per-card percentages you're paying off.
Douglas Dollars 💯 (415.0 shares, voted yes)
KevinRudd is right. Source: Me
aaronpk 💯☕️ (1228.0 shares, voted no)
I am curious whether KmikeyM considers himself to be more motivated by quick wins, or whether he is able to create other incentives that will feel like incremental progress. I am in favor of the Avalanche method because ultimately it saves money. I think @egli is on to something here suggesting that there are ways to track the Avalanche payoff plan in a way that is incentivizing. Certainly working with Lillian should be helpful in that regard since there will also be some direct accountability and feedback from her. However, I do want to vote for which will ultimately be the most effective for KmikeyM. If the Avalanche method runs the risk of KmikeyM getting unmotivated then it could end up costing more in the end if he falls off the track for example.
Curt ☕️💼 (82.0 shares, voted no)
Without revealing the actual numbers, is there a way to provide some additional information? Are the interest rates wildly different from one another? Are the balances varied by orders of magnitude, or relatively similar?
Mike Merrill
The goal here is less about the TRUE PRACTICAL RIGHT ANSWER for me and more "What would KmikeyM do?" And I mean that from the persona of KmikeyM. I think an argument could be made for both... Snowball feels like a great way to have more celebrations along the way! Avalanche is more financially rewarding! There are other aspects but I'm looking for the method that the shareholders think fit the brand.
padraicomeara (13.0 shares, voted no)
I feel the right approach is Avalanche, I am personally someone who does not appreciate having debt and the most cost effective way of getting rid of it is always the way I would choose for myself. I think as KmikeyM the brand I feel I know is one that does the right thing, approaches money in the most sane way possible. I definitley encourage the Avalanche. I'd rather have less money to spend now, and be out of debt for future peace of mind. Good luck!