Personal Finance · Unit 5: Loans and Debt · Complete Toolkit
The Debt Snowball vs Avalanche - Paying It Off
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Fits: Personal Finance
What students do
- List a set of debts and sort them into snowball order and avalanche order
- Calculate monthly interest on a debt using balance times APR divided by 12
- Read a bar chart comparing total interest paid under each payoff method
- Recommend a payoff strategy and justify it using motivation versus math
What it covers
- The debt snowball method, which targets the smallest balance first
- The debt avalanche method, which targets the highest interest rate first
- Why the same debts and the same extra payment can cost different amounts depending on order
- How to weigh motivation against total savings when choosing a method
Learning targets
- Define the debt snowball, the debt avalanche, payoff order, and motivation
- List a set of debts and find the payoff order for the snowball and the avalanche methods
- Read a bar chart that compares the total interest paid by the snowball vs the avalanche
- Compare motivation vs math and choose the method that is right for a given situation
From one teacher to another
I like this lesson because it settles an argument instead of just explaining two vocabulary words. Same three debts, same $200 a month, one borrower, two orders, two different totals, and students calculate the gap themselves instead of taking my word for it. The honest answer, that the best method is the one you'll actually finish, tends to surprise them.
Every lesson on this site is free to download and use. If one of them saved you a prep period, you can chip in a few bucks toward my three kids' daycare fund. That's genuinely where tips go.