Financial Readiness
Two proven ways to pay off debt, plus the military-only protections most service members never claim.
The Fort Bliss Financial Readiness team, whose first mission is reducing Soldier debt, Jan. 22, 2021. Photo by Stephanie Santos, Fort Bliss, DVIDS (public domain).
There are two simple ways to pay off debt. Avalanche means you put every spare dollar on the debt with the highest interest rate. Snowball means you knock out the smallest balance first for a quick win.
Either way, the rule is the same: pay the minimum on everything, then throw every spare dollar at one target. Both methods work. The one you actually stick with is the one that wins.
Two ways to win. Avalanche saves the most money over time. Snowball gives you quick wins to keep your momentum. Both are good, so pick the one you can hold to.
Avalanche: Put every spare dollar on the highest-interest debt first. Saves the most money.
Snowball: Knock out the smallest balance first. Most momentum.
Pay the minimum on everything, then throw every spare dollar at one target. The method you stick with wins.
Source: Military OneSource · CFPB
The avalanche puts your extra cash on the debt with the steepest interest rate first. That cuts your total interest bill the fastest, so you pay less over time. This lines up with the CFPB's order: pay off high-interest debt first, then set goals, then save and invest.
The snowball goes after your smallest balance first. You clear a whole debt fast, which feels good and keeps you going. If your interest rates are close and you need motivation more than the math, snowball can be the smarter pick. A method you quit saves you nothing.
You do not have to lock in forever. Some people run the snowball for one or two quick wins, then switch to avalanche to save on interest. Pick the plan you can hold through a deployment or a move, and adjust as you go.
Now here is the part most service members miss.
Wearing the uniform gives you two protections civilians do not have. They can lower your interest rate and block junk fees. You just have to claim them.
6%
SCRA cap on most debts you took out before active duty.
36%
MLA cap (MAPR) on many consumer loans taken while on active duty.
Claim them
Plenty of service members leave these on the table. Do not be one of them.
Source: CFPB · FDIC
You do not have to do this alone. Military OneSource offers free, confidential debt and budget counseling at 800-342-9647. Your installation legal assistance office (JAG) can help with SCRA and MLA disputes at no cost. The CFPB has plain-language resources on your SCRA and MLA rights and takes complaints. And the DoD debt-payoff calculators let you run your own numbers. All are linked in Sources below.
Can I switch methods partway?
Yes. Some people do snowball for two quick wins, then switch to avalanche to save on interest. Do what keeps you going.
Should I pay off debt or save first?
Common guidance: build a small starter emergency fund, then hit high-interest debt hard. High-rate debt usually grows faster than most savings earns. This is general education, not advice for your exact case. A free counselor can help you decide.
Does using SCRA hurt my credit?
No. Using your SCRA rights is not supposed to count against you. If a lender raises problems, your JAG office can step in.
