How to Pay Down Debts With Your Spouse
How to Budget When Your Spouse Won't: Part 9 of our 10 part budgeting series
Click the interactive image above for a graphic explanation of the snowball and avalanche methods.
The Avalanche Method
When applying the avalanche debt repayment method, you first pay the highest interest rate loans. Once that loan is paid off, you put that money toward the account with the next highest interest rate until you are done. Then you repeat the process.
If you can stick to it, this method is the fastest way to pay off your loans and save you the most money. On the other hand, if the highest interest rate loan has a high balance, the process can feel discouraging if that first loan isn't repaid quickly.
Example: You want to pay down your debt faster than the minimum monthly payments.
Here is a list of your monthly debt payments: A. Credit card balance of $400 at 12% APR
B. Payday loan balance of $500 at 300% APR
C. Mortgage balance of $246,000 at 4%
Here is the order you would pay these debts off:
1. Payday loan balance of $500 at 300% APR
2. Credit card balance of $400 at 12% APR
3. Mortgage balance of $246,000 at 4%
The Snowball Method
When applying the snowball debt repayment method, you first pay off the loan with the smallest balance. Once that debt is paid, you take the money you were putting toward that payment and roll it onto the next-smallest debt owed.
Paying off the loan with the smallest balance first is the fastest way to eliminate your first debt and can provide a psychological boost to keep you motivated. However, this method is the slowest way to pay off your loans and will cost you the most.
Example: You want to pay down your debt faster than the minimum monthly payments.
Here is a list of your monthly debt payments:
A. Credit card balance of $400 at 12% APR
B. Payday loan balance of $500 at 300% APR
C. Mortgage balance of $246,000 at 4%
Here is the order you would pay these debts off:
1. Credit card balance of $400 at 12% APR
2. Payday loan balance of $500 at 300% APR
3. Mortgage balance of $246,000 at 4%
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The Hybrid Method
First apply the snowball method, paying off the loan with the smallest balance. After gaining the confidence you need to see the plan through, switch to the avalanche method.
You'll have the best of both worlds, the psychological boost of paying off a debt and then the most mathematically effective approach to tackling your debts.
The Debt You Most Hate
As a Certified Financial Therapist™ and Accredited Financial Counselor®, I often remind couples that the best debt repayment strategy is not always the one a calculator says is optimal—it is the one they will actually stick with together.
While many financial experts recommend the debt snowball method (paying off the smallest balances first) or the debt avalanche method (paying off the highest-interest debts first), I encourage couples to consider another option: tackling the debt they hate the most, an approach that recognizes that some debts carry a heavier emotional burden than others, regardless of their balances or interest rates.
In my work with couples, I have found that reducing financial stress is often just as important as reducing interest costs. A particular credit card, student loan, medical bill, or personal loan may represent anxiety, frustration, or even conflict within a relationship. When couples identify the debt that weighs on them the most and focus their efforts there, they often gain a sense of relief and momentum that helps them stay motivated.
Professional Support
As a Certified Financial Therapist™ and Accredited Financial Counselor®, I help couples work together to eliminate their debt.
Click here for more details about how and when I can support you.
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When you plan a budget with your spouse, you are not budgeting with Excel or other tools such as our Budget Template for Couples. You are using these tools. You are budgeting with someone you love and share your life with.
Our free Budget Template for Couples is designed specifically for couples. Each category includes linked graphic-centric short videos to help couples in the budgeting process, providing essential prompts to consider budgeting each categorically appropriately.
This 10-part series is dedicated to helping you work with a spouse to budget together and provide the information you need to make educated decisions with your dollars.
Original Post: 8/15/23
Updated Post: 7/17/26
