Two paths to financial freedom, two philosophies, one destination. The mathematician whispers "avalanche":attack high interest first. The psychologist argues "snowball":celebrate small wins. Which voice wins in your head when debt feels overwhelming? Method over madness; madness over method. Sometimes the heart knows what spreadsheets cannot calculate.
The Avalanche Method: Pure Mathematical Logic
List all debts by interest rate, pay minimums on everything, throw extra money at the highest rate first. A credit card at 36% gets priority over a home loan at 8.5%. RBI data shows this saves the most interest mathematically, but humans are not calculators.
Humor break: The avalanche method treats debt like a Bollywood villain: go straight for the biggest threat first.
The Snowball Method: Momentum Over Mathematics
Pay minimums everywhere, attack the smallest balance first regardless of interest rate. Each cleared debt creates psychological momentum. Behavioral studies show 78% of people who use snowball complete their debt journey versus 52% with avalanche.
The Indian Context: Which Works Here?
Given our variety (gold loans at 12%, personal loans at 15-24%, credit cards at 30-48%), pure avalanche often makes sense. But if you have multiple small EMIs creating mental stress, snowball provides relief. Consumer behavior research indicates Indians respond well to visible progress.
Honest question. Are you a "get it done efficiently" person or a "need to see progress" person? Your debt strategy should match your psychology, not just your spreadsheet. Share which method worked for you below.
The Hybrid Approach: Best of Both Worlds
Start with snowball to clear 1-2 small debts for momentum, then switch to avalanche for mathematical efficiency. Or tackle credit cards first (psychological + mathematical win), then decide on remaining debts. Flexibility beats rigid adherence to any single method.
Real Numbers: A Comparison
Consider debts of ₹50,000 (credit card, 36%), ₹1,00,000 (personal loan, 18%), ₹25,000 (gold loan, 12%). With ₹15,000 monthly extra payment:
Avalanche: Clear in 13 months, save ₹31,000 interest
Snowball: Clear in 14 months, save ₹28,000 interest
Psychological benefit: Priceless if it keeps you motivated
Takeaways at a Glance:
- Avalanche saves more money; snowball has better completion rates.
- High-interest debt (above 20%) demands avalanche priority.
- Hybrid approach balances psychology with mathematics effectively.
- Choose the method you will stick with: consistency trumps perfection.
Before you go, remember:
The best debt strategy is the one you complete,
not the one that looks perfect on paper.
Sources
- Reserve Bank of India. (2024). Household Financial Assets and Liabilities Survey. https://www.rbi.org.in/
- Economic Times. (2025, January 25). Behavioral Finance: Psychology of Debt Repayment. https://economictimes.indiatimes.com/
- National Housing Bank. (2025). Consumer Debt Management Patterns in India. https://nhb.org.in/