How to pay off debt: snowball and avalanche methods
19 September 2025 · Debt Review Centre
If you can afford your required repayments and have some money left over, a repayment order can help you use that extra money consistently. This guide explains a smallest-balance-first approach and how it differs from paying the highest interest rate first.
If your essential costs and minimum payments already exceed your income, start with an affordability assessment. If you are under debt review, discuss extra payments with your counsellor so they are handled within your existing arrangement.
1. List your budget and every debt
Use recent statements to record each balance, interest rate, required payment and due date. Include any arrears or fees. Keep account numbers private when sharing a working budget.
Then make a household budget that covers necessary living costs, required payments and expenses that do not occur every month. Work out how much extra you can maintain without relying on more credit.
2. Choose the repayment order
With the snowball method, you put extra money towards the smallest balance while maintaining required payments on the others. When that account is settled, move its payment to the next account. Closing a small balance can make progress easier to see.
With the avalanche method, you target the highest interest rate first. This aims to reduce interest costs, although the first account may take longer to clear. Use the debt avalanche calculator to explore a repayment scenario using your own figures.
Check the terms of each account and deal with urgent arrears or legal notices before choosing an order based only on balance or interest. A repayment method does not override an existing agreement or court order.
3. Roll the payment forward when an account is settled
Here is a simple example of the snowball method. Suppose Account A needs R150 a month, Account B needs R330, and your budget allows an extra R100.
- Pay R250 towards Account A while maintaining the required R330 on Account B and all other required payments.
- Once Account A is fully settled, add its R250 payment to Account B’s R330. You would then put R580 towards Account B, if your budget still allows it.
- Confirm the final balance and settlement before moving the payment. Interest, fees and the last payment can change the exact figures.
This example illustrates how the payment moves; it does not estimate a payoff date or include account-specific interest and fees.
Check the plan each month
Compare statements with the payments you made. Adjust your budget when expenses or income change and keep some provision for unexpected costs where possible. The emergency fund calculator can help you work out a savings target.
If the plan becomes unaffordable, seek help before missing payments. Read about managing repayment difficulties and how formal debt review works.
Related questions and next steps
- Help with your household budget
Discuss the numbers if you need help putting a budget together.
- Planning a holiday-season budget
Set aside ordinary expenses before deciding what to spend on celebrations.
- Teaching children about money
Use everyday decisions to practise spending and saving.
- Household affordability
See what remains after living costs and debt payments.
See what your monthly payment could look like
Use the free calculator to enter your income, expenses, and debt payments. You will get an immediate estimate of your possible debt review payment and monthly savings. It is not an application.