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Winter is a part of life in Canada and for most people, having debt is also a part of life. And just like winter, debt can be tricky to get through. Sometimes we get a little overwhelmed by our debt situation, and we lose our way, missing payments, falling further and further behind.

But don’t despair! There are ways to get back on track and onto the road towards being debt-free and fully in control of your debt repayment.

Options for Paying off Debt

Having debt doesn’t have to be a bad thing. When used properly, taking on debt allows you to purchase items you wouldn’t be able to buy if you had to pay in cash right then and there. Using a credit card can also be a great credit-building tool, as long as you pay off your balance in full every month and on time.

But if you have debt and you can’t seem to pay it all off in full, there are three debt repayment strategies you can look into to pay it back: the minimum monthly payment method, the snowball method, and the avalanche method. Here’s a quick review of each one and how much money they can each save you.

Debt Snowball vs Debt Avalanche

1. Minimum Monthly Payment Method for Debt Repayment 

Let’s say you have three debts: $5,000 at 20% interest, $5,000 at 19.9% interest, and $5,000 at 23% interest, for a grand total of $15,000 in total debt. And let’s say you only made the minimum monthly payment of about $375 for all three debts.

Using a Debt Calculator, you can see that it would take you more than twenty-five years to pay it all off and you would end up paying more than $31,846.76 in interest! 

That doesn’t sound too appealing, now does it? Not to mention that whatever you might have purchased to rack up that debt won’t likely still be around after twenty-five years. Who wants to be paying for things you no longer have?

2. Snowball Method for Debt Repayment

Now, let’s say you can put some extra money towards your debt payments every month by paying more than just the minimum payment. If you were to use the snowball method of debt repayment, you would pay the minimum monthly payments on all your debts, but then take any extra money you have and apply it to your smallest debt. 

Then, once that debt has been paid off in full, you focus any extra funds on paying off the next smallest debt, and so on. But you must make sure to maintain the minimum payments on all your other debts; otherwise, your credit score will take a major hit.

Using the snowball method for debt repayment, now all of a sudden you can pay off your debt in less than six years rather than over twenty-five years. You just cut down your debt repayment time by more than 19 years!

And the best part? You would have paid $11,224.77 in interest as opposed to $31,846.76, saving you over $20,000! The great thing about the snowball method of debt repayment is that by paying off the smallest debts and balances first, you start to see your debt paid off a lot quicker at the beginning, which can be very motivating, encouraging you to continue to pay off your debt. 

3. Avalanche Method for Debt Repayment

If you don’t like carrying higher interest debts, then the avalanche method of debt repayment could be the one for you.  In using the avalanche method, you take any extra funds you have after paying the minimum monthly payments on all your debts and apply these extra funds to the debt with the highest interest rate.

Once that debt has been paid off in full, you focus any extra funds on the next highest interest rate debt, and so on.

At first, you won’t see your debts paid off in full as quickly as you would using the snowball method, but you would be saving more money in interest charges by focusing any extra funds on the debts with the highest interest rates. This allows you to minimize the interest charges as you are “plowing through” the higher interest debts first.

Using the previous example, you could clear your debts in 5.8 years, just like the snowball method, but only pay $10,771.97 in interest, saving you another $452.80. You won’t see your debts paid off as quickly at first, but you will pay less interest over time. 

Why Paying off Debt Should be a Priority

The more debt you have, the more money you will save by putting extra money towards paying it off. You can use a free Debt Calculator to see how different repayment strategies can work for you, including getting a low-interest debt consolidation loan or signing up for a Debt Consolidation Program. How much money can you save on your journey towards being debt-free?

Too Much Debt? Free Help is Available!

If your debt is too overwhelming and piling up around you, making you feel like you just want to hide under a cozy blanket this winter, professional debt help and support are available. You don’t have to face your debt alone! Contact a not-for-profit credit counselling agency and book a free debt assessment. During this appointment, a certified Credit Counsellor can review your debt situation and provide you with all your best options for getting debt-free.


Sandra Sherk is a certified Credit Counsellor for Credit Canada Debt Solutions—a not-for-profit credit counselling agency providing free and confidential debt and credit counselling services, personal debt management, debt consolidation and resolutions, as well as preventative counselling, educational seminars, and free tips and tools. Credit Canada is Canada’s first and longest-standing credit counselling agency and a leader in financial wellness, helping Canadians successfully manage debt since 1966. Call 1.800.267.2272 for a free Debt Assessment.