Dave Ramsey Is Wrong: When the Avalanche Method Beats Snowball (With Math)

Dave Ramsey's debt snowball has helped millions get out of debt. Pay off your smallest balance first, get a quick win, build momentum. It's psychologically brilliant. But here's what he won't tell you: it can cost you thousands of dollars.

The Case Against Snowball

The snowball method ignores interest rates. That's fine when your rates are similar—but devastating when they're not.

Real Example: When Snowball Fails

Debt	Balance	APR
Medical bill	$1,200	0%
Credit card	$15,000	24%

Snowball says:

Pay off the $1,200 medical bill first (smallest balance)

Avalanche says:

Attack the $15,000 credit card first (24% APR)

Following snowball here costs you $3,600+ in unnecessary interest.

When Dave Ramsey IS Right

To be fair, the snowball works great in certain situations:

Your rates are similar. If all your debts are between 18-22%, the order barely matters—do whatever motivates you.

You've failed before. If you've tried and quit multiple times, quick wins might be worth the extra cost.

The savings are minimal. If avalanche only saves $200 over 3 years, who cares? Go with what feels right.

Compare both methods with your debts

See exactly how much each approach costs and decide for yourself.

The $5,000 Decision Framework

Here's the rule I use: if the avalanche saves more than $500 per year, use the avalanche. Below that, the psychological benefits of snowball might be worth it.

Quick Decision Guide

Use Snowball When:

• Interest rates are within 5% of each other
• You need quick wins to stay motivated
• The math difference is under $500
• You've quit debt payoff plans before

Use Avalanche When:

• You have a high-rate card (20%+) with a big balance
• You have 0% or low-rate debts you'd tackle first with snowball
• The savings are $1,000+ over the payoff period
• You're motivated by math and optimization

The Hybrid Approach Nobody Talks About

You don't have to pick one. Here's what I actually recommend:

Start with one quick win. Pay off the smallest debt first to build confidence.
Then switch to avalanche. After that first win, follow the math.
Re-evaluate when you get another quick win opportunity. If a debt gets down to $500 and you can knock it out this month, do it for the motivation boost.

The Research Says...

Studies show snowball has higher completion rates—people are more likely to finish paying off debt when they see early progress. But they also show people overestimate how much motivation helps and underestimate interest costs.

Translation: you're probably more disciplined than you think, and interest costs more than you realize.

The Bottom Line

Dave Ramsey isn't wrong—he's incomplete. The snowball method is a tool, not a rule. When your highest-rate debt is also small, use snowball. When you have a 24% credit card sitting behind a 0% medical bill, use avalanche.

Run the numbers. Make the decision that costs you the least—whether that's in dollars or in willpower.