Does Dave Ramsey recommend the snowball or avalanche?
Dave Ramsey recommends the **debt snowball** — paying off the smallest balance first regardless of interest rate. His argument is that personal finance is “80% behavior and 20% head knowledge,” and the quick wins from eliminating small debts keep people motivated to continue. The ChooseFI perspective: Ramsey is right that behavior matters most, but for disciplined people, the avalanche saves real money.
How much more does the snowball cost compared to the avalanche?
It depends on your debt portfolio. For typical credit card debt with rates clustered between 18-26%, the snowball usually costs **$300-$1,500 more** in total interest. For debts with a wide rate spread (like a 28% credit card and a 5% personal loan), the difference can be **$2,000+**. For debts with very similar rates, the difference may be under **$100**.
Can I switch methods mid-payoff?
Absolutely. Many people start with the snowball to build momentum by eliminating small debts, then switch to the avalanche once they’re down to 2-3 larger debts with different rates. There’s no penalty for changing strategies. The only mistake is stopping entirely.
Should I include my mortgage in the snowball or avalanche?
Generally, **no**. Most financial advisors (including those in the FI community) recommend excluding your mortgage from debt payoff plans unless it has a rate above 6-7%. Mortgage rates are typically much lower than consumer debt, and the money is better deployed in index fund investments after high-interest debt is eliminated.
What about the debt snowflake method?
The debt “snowflake” supplements either method by applying **every small windfall** to debt — $20 from selling old books, a $15 rebate, spare change roundups. Individually these amounts are tiny, but they add up and keep you psychologically engaged in your payoff plan between paychecks.
Does paying off debt or investing give a better return?
Paying off a credit card at 22% APR is a **guaranteed 22% return** on your money. No investment reliably returns that much. The general rule: pay off any debt with an interest rate above 6-7% before investing beyond your employer’s 401(k) match. Below 6%, investing in index funds is likely to outperform over the long term.
