Direct answer
The snowball method pays the smallest balance first for faster wins. The avalanche method pays the highest interest rate first to reduce interest cost. Both require minimum payments on every debt.
At a glance
- List every balance, rate, and minimum payment.
- Choose one priority debt at a time.
- Redirect the finished payment to the next debt.
Step-by-step method
- Build the debt list. Include balance, interest rate, minimum payment, due date, and any fees.
- Protect all minimums. Missing payments can create penalties and account problems.
- Choose the priority rule. Use smallest balance for snowball or highest interest rate for avalanche.
- Add a fixed extra amount. Consistency matters more than an occasional large payment that cannot be repeated.
- Roll payments forward. When one debt is cleared, apply its full payment to the next priority.
Practical example
With debts of PKR 20,000 at 10%, PKR 50,000 at 30%, and PKR 100,000 at 18%, snowball starts with PKR 20,000 while avalanche starts with PKR 50,000 because its rate is highest.
Put this into practice
Work from confirmed balances, dates, minimum payments, and written agreements. Keep ordinary spending separate from repayments, update the remaining amount after every payment, and review the plan before a due date is missed. Seek qualified help when repayment obligations are no longer manageable.