<prompt> Human: I wanted to start a separate thread on this because I feel like avalanche becomes the knee jerk recommendation of so many people on here. And I believe this to be incredibly misguided. Lets just imagine a hypothetical scenario where you have one loan balance of 7,500 paying 125month at 5 interest, and another loan balance of 60,000 paying 400month at 7.5 interest. And lets just imagine you have an extra 500month to pay down your debt. Most people here would recommend using that extra money to pay off the higher interest loan. I strongly disagree. For every 1,000 you pay towards a debt at 1 lower interest as compared to another loan, you are going to pay 10 annually in interest. Let me say that again. A measly 10. Over the course of twelve months. As opposed to putting that 1,000 into a higher interest loan with a much larger balance. For every percentage point this is the difference between paying at a higher interest rate vs. a lower interest rate. So in the example I provided, if you put all that extra money into the smaller loan balance and lower interest rate, you would have paid off that debt in 13 months. So 13 months, and your fixed monthly expenses have dropped by 125month. And you have the reward of seeing a loan vanish. Never underestimate what that does to motivate someone, and what it does for their psyche. Now lets just imagine you had put that money into the larger loan balance instead. 6,250 is how much extra you would have paid toward the larger balance. Which would have saved you 62.50 over the course of the year in interest. EDIT---I am leaving the above text as is from the original post but I wanted to make one small correction. 62.50 would be per percentage point, the difference between the two loans is 2.5, so this would actually be 156.25 annually, or 13month. Which doesnt really change my argument or stance in any way, I just wanted to correct the math. Surprisingly no one corrected it for me.But this savings is not really something you see except for on paper. Its not really palpable. Its just something you see on your loan statements, while you continue to pay on both loans. And that is not too terribly rewarding IMO. Seeing a loan vanish is incredibly rewarding. So in the given example, would you pay an extra 13 edited a month in interest in order to see your fixed monthly expenses drop by 125month? I would in a heartbeat. And yet many people on here would look at the numbers above, and give a knee jerk pay on the highest interest rate response. In many instances this advice is marginally helpful, and in fact will make the person making those payments miserable with no reward in sight. You could have saved that extra 5 by skipping out on Starbucks once every thirty days. The bottom line is being a glutton for punishment sometimes leads to a lot of misery with a negligible reward to show for it.  <response>: Mathematically, avalanche is the better choice and you will pay the least amount of interest that way. However, in the situation where the rate difference between two loans is very small, it might be more beneficial to pay off the lower balance, slightly higher interest loan first, especially if you might have cash flow issues. There is a point though, where that rate difference becomes large enough, that going with the snowball will end up costing you too much. In that case, you should stick with avalanche, as it is the best financial option. 