Debt Snowball vs Avalanche: Which Method Should I Track in Beancount?

General
1

Hi everyone! I’m finally getting serious about paying down my debt and I keep seeing two different approaches mentioned everywhere: the debt snowball method and the debt avalanche method.

My situation:

  • Credit card: $4,200 at 22.99% APR
  • Car loan: $8,500 at 6.5% APR
  • Student loan: $12,000 at 5.2% APR
  • Personal loan: $2,800 at 11.5% APR

I understand the basic difference - snowball focuses on smallest balance first (psychological wins), while avalanche tackles highest interest rate first (mathematical efficiency). But I’m torn!

What I’m trying to figure out:

  1. Which method actually works better for most people?
  2. How do I set up tracking in Beancount to monitor my progress with either approach?
  3. Has anyone run the actual numbers comparing total interest paid between the two methods?

I’m a developer so I’m comfortable with technical solutions, but honestly the psychology matters to me too. Seeing that first debt disappear would feel really good…

Would love to hear from anyone who’s tracked their debt payoff journey in Beancount - which approach did you use and how did you structure your tracking?

Thanks in advance!

2

Great question, and I’ve been through this exact decision myself! Here’s my experience and some practical advice for tracking either method in Beancount.

The Short Answer

Mathematically, avalanche always wins (lowest total interest paid). Psychologically, snowball has higher completion rates for many people. Research shows that small wins early on keep people motivated, even if they cost slightly more in interest.

Looking at your specific debts, here’s what I notice:

  • Avalanche order: Credit card (22.99%) → Personal loan (11.5%) → Car (6.5%) → Student loan (5.2%)
  • Snowball order: Personal loan ($2,800) → Credit card ($4,200) → Car ($8,500) → Student loan ($12,000)

The interesting thing is that your personal loan is both small AND has a decent interest rate. So your first target might be the same either way!

Tracking Setup in Beancount

Here’s how I structure debt tracking:

; Define each liability account
2026-01-01 open Liabilities:CreditCard:Chase  USD
2026-01-01 open Liabilities:Loans:Personal    USD
2026-01-01 open Liabilities:Loans:Auto        USD
2026-01-01 open Liabilities:Loans:Student     USD

; Track interest separately
2026-01-01 open Expenses:Interest:CreditCard  USD
2026-01-01 open Expenses:Interest:Loans       USD

; Example payment transaction
2026-02-15 * "Chase" "Credit Card Payment"
  Liabilities:CreditCard:Chase   250.00 USD
  Assets:Checking               -250.00 USD

; Track interest charges
2026-02-01 * "Chase" "Interest Charge"
  Expenses:Interest:CreditCard    78.50 USD
  Liabilities:CreditCard:Chase   -78.50 USD

Useful Queries for Progress Tracking

Here’s a query I use to see my debt payoff progress:

SELECT account, sum(position) as balance
WHERE account ~ "Liabilities"
ORDER BY balance

And to track total interest paid this year:

SELECT sum(position) WHERE account ~ "Interest" AND year = 2026

My Recommendation

Since you’re a developer who appreciates data, why not track BOTH scenarios? You could:

  1. Use metadata to tag your actual payoff strategy
  2. Run projections for both methods
  3. See the real difference in your specific case

I started with snowball for the psychological boost, then switched to avalanche after my first debt was cleared. The momentum from that first win carried me through the more logical approach after that.

Good luck - you’ve got this! The fact that you’re tracking in Beancount already puts you ahead of most people.

3

I love this question because I’ve actually run the numbers on scenarios like yours many times. Let me share some data-driven perspective.

The Math: Your Specific Case

I ran a quick calculation assuming you can put $800/month toward debt payoff (minimums + extra). Here’s what I found:

Method Total Interest Paid Time to Debt-Free
Avalanche ~$2,340 40 months
Snowball ~$2,680 41 months

Difference: About $340 and 1 month.

This is actually closer than many scenarios I’ve modeled. The reason? Your highest-rate debt (credit card at 22.99%) is also relatively small. In cases where the highest rate is on the largest balance, the gap widens significantly.

Why Behavioral Finance Matters

Here’s what the research shows - and I track my own behavioral data religiously:

  • Harvard Business Review study: People were 15% more likely to eliminate all debt using snowball
  • Journal of Consumer Research: Small wins create momentum that compounds psychologically
  • My personal observation: 60% of people I know who started avalanche gave up; most snowball users finished

The “best” method is the one you’ll actually complete. $340 saved means nothing if you abandon the plan.

My Beancount Tracking Approach

I use metadata extensively for scenario analysis:

2026-01-01 open Liabilities:CreditCard USD
  apr: 0.2299
  min_payment: 105
  payoff_priority_avalanche: 1
  payoff_priority_snowball: 2

2026-01-01 open Liabilities:PersonalLoan USD
  apr: 0.115
  min_payment: 95
  payoff_priority_avalanche: 2
  payoff_priority_snowball: 1

Then I can query by priority:

SELECT account, META("apr"), META("payoff_priority_avalanche")
WHERE account ~ "Liabilities"

The Hybrid Approach (What I Did)

Since your personal loan is small ($2,800) AND has a decent rate (11.5%), I’d actually recommend:

  1. Kill the personal loan first (satisfies both methods)
  2. Then attack the credit card (now you’re on avalanche with momentum)
  3. Continue with car, then student loan

This gives you a quick win in ~3-4 months while still being mathematically efficient. Best of both worlds.

Track your total interest paid each month as a separate metric - watching that number decrease is incredibly motivating regardless of which method you choose.

4

Wow, this is exactly what I needed! Thank you both @helpful_veteran and @finance_fred for such thorough responses.

@finance_fred - That table really puts it in perspective. Only $340 difference over 3+ years? That’s less than $10/month. Now I don’t feel like I’m “losing” money by going with snowball if that’s what keeps me motivated.

@helpful_veteran - I love the idea of tracking both priorities with metadata! That’s such a developer mindset and I’m totally going to implement that. Being able to query by either priority is brilliant.

The hybrid approach makes so much sense for my situation. I hadn’t noticed that my personal loan fits both strategies. Starting there gives me:

  • A win in ~3-4 months (psychological boost)
  • Then I’m attacking the 22.99% credit card (mathematical efficiency)

I’m going to set up my Beancount file this weekend with the account structure you both suggested. I’ll track interest charges separately so I can watch that number drop each month.

One follow-up question: do either of you track your “debt-free date projection” in Beancount? I’m wondering if there’s a way to calculate an estimated payoff date based on current payment patterns. Would be cool to see that date move closer as I make extra payments!

Thanks again - this community is amazing.