Debt Payoff Strategies: How to Decide Which Debt to Attack First
Published 29 June 2026
The avalanche method: pay the highest interest rate first
The avalanche method directs every spare rand at whichever debt carries the highest interest rate, while paying the minimum on everything else. Once that debt is cleared, you roll its payment into the next-highest-rate debt, and so on. Mathematically, this is the cheapest way to clear multiple debts, because it minimises the total interest charged across all of them.
A personal loan at 24% and a bond at 11% are a clear case: the avalanche method says put extra money toward the personal loan first, every time, because each rand does more work reducing a 24% balance than an 11% one. Run both balances through the Personal Loan Calculator and the Bond Repayment Calculator to see exactly how much interest each extra rand saves on its respective debt.
The snowball method: pay the smallest balance first
The snowball method ignores interest rates and instead targets whichever debt has the smallest remaining balance, regardless of rate. Clearing it fastest gives you a quick win — one fewer account to manage — and that payment then rolls into the next-smallest balance.
Snowball usually costs more in total interest than avalanche, because it ignores rate. Its advantage is behavioural: clearing a full account early is motivating in a way that chipping away at the largest, highest-rate balance for months without a finished account isn't. If you've struggled to stick with a debt plan before, the snowball method's early wins may matter more than the extra interest it costs.
Why extra payments matter more on high-rate debt
Whichever order you pay debts in, the size of the saving from any extra payment depends heavily on the rate of the debt it's applied to. An extra R1,000 a month on a personal loan at 24% saves meaningfully more in interest than the same R1,000 applied to a bond at 11%, because the higher rate means more interest accrues on every rand of remaining balance, every month.
This is also why a personal loan or credit card balance deserves priority over a bond in almost every avalanche scenario — the rate gap between unsecured debt and a home loan is usually large enough that it dominates the decision, even though the bond is typically the bigger balance in absolute terms.
Putting a plan together
List every debt with its balance, rate, and minimum payment. Decide whether you're optimising purely for the lowest total interest (avalanche) or for the psychological wins of clearing accounts quickly (snowball) — there's no wrong answer, only a tradeoff between cost and motivation.
Then use the calculator that matches each debt to see what a given extra payment actually does to it: the Personal Loan Calculator for unsecured loans, and the Bond Repayment Calculator for your home loan. Seeing the real numbers — months saved, interest saved — for your specific debts makes the strategy concrete instead of theoretical.
Want to see this in action? Try the Personal Loan Calculator.
Frequently asked questions
Which is better: debt snowball or debt avalanche?
Avalanche (highest interest rate first) saves more money mathematically, since it minimises total interest paid across all your debts. Snowball (smallest balance first) can work better in practice if the quick wins of clearing full accounts keep you motivated to stick with the plan — the best method is the one you'll actually follow through on.
Should I pay off my personal loan or my bond first?
In most cases, prioritise the personal loan if its interest rate is meaningfully higher than your bond's rate, which is usually true since personal loans are unsecured. Keep paying at least the minimum on the bond while directing extra payments at the higher-rate debt.
Should I keep an emergency fund while paying off debt faster?
Most financial guidance suggests keeping a small emergency buffer (even one to three months of expenses) before aggressively paying down debt, so an unexpected cost doesn't force you to borrow again at a worse rate. Beyond that buffer, extra cash toward your highest-rate debt is usually the better use of it.
How do I work out how much an extra payment actually saves?
Use a calculator that simulates the loan month by month with the extra payment included, rather than estimating — the saving isn't linear and depends on your rate, balance, and remaining term. The Personal Loan Calculator and Bond Repayment Calculator on this site both show interest saved and time saved directly when you add an extra monthly payment or lump sum.