Two Proven Debt Payoff Strategies

When paying down multiple debts, two evidence-based methods help: the avalanche method (highest interest first) and the snowball method (smallest balance first). Both work — the avalanche saves more money mathematically, while the snowball builds psychological momentum faster. The best method is the one you'll actually stick to.

Avalanche Method: Mathematically Optimal

Pay minimum on all debts, then put all extra money toward the debt with the HIGHEST INTEREST RATE. Once that's paid, roll the payment to the next highest-rate debt. Example: Pay off 21% credit card first, then 19.99% LOC, then 5% car loan. Avalanche minimizes total interest paid and gets you out of debt fastest. In Canada, this saves thousands on credit card debt at typical 19.99%+ rates.

Snowball Method: Psychological Wins

Pay minimum on all debts, then put extra money toward the SMALLEST BALANCE. Paying off small debts first creates quick wins, building momentum and motivation. Many people use snowball even though it costs slightly more in interest — because the psychological boost helps them stay disciplined. Choose snowball if you need momentum; choose avalanche if you want to minimize total interest.

The Power of Extra Payments in Canada

Adding just $100/month to your debt repayment can cut years off your timeline. Example: $15,000 credit card debt at 21% with $300 minimum takes 6+ years and $10,000+ in interest. Adding $100/month ($400 total) pays it off in 3.5 years and saves $5,000 in interest. The earlier you accelerate, the more you save.

Balance Transfers & Consolidation

If you have high-rate credit card debt (19.99%), explore 0% balance transfer offers (typically 6–12 months) or debt consolidation loans at lower rates (7–12%). A $10,000 balance transfer from 21% to 0% saves $2,100 in year-one interest. Lock in a rate, focus on payoff, and avoid new spending.