Repaying debts with the avalanche method: start with the costliest
AmanaFi team · Updated · 1 min read
The avalanche method means paying the minimum on all debts, then putting the surplus on the costliest. It is the cheapest when some debts carry interest or penalties.
How it works
The steps resemble the snowball, only the order changes.
- List all debts with amount, cost and due date.
- Rank them from costliest to least costly.
- Pay the minimum everywhere, the maximum on the costliest.
- Roll the freed instalment onto the next.
Avalanche or snowball?
The avalanche costs less overall; the snowball gives quicker wins. The best plan is the one you will keep. If you hesitate, start by eliminating debts with penalties, then move on to small ones.
Interest-free debts
An interest-free loan to a relative costs nothing more over time, but it commits your word and your relationship. Rank it by promised due date rather than by cost, and never let it slip without warning.
Frequently asked
Can I change method along the way?
Yes, the plan can be revised. What matters is to keep paying regularly and not take on new debt during repayment.
Put it into practice with AmanaFi
Period budget, projects, debts and loans, zakat: free, on mobile.
Open the app