Minecraft
Preparation
Lesson Narrative
Students analyze the mathematical and psychological trade-offs between the two primary debt acceleration frameworks. They will build amortization trackers to simulate the Debt Snowball (ranking by lowest balance for behavioral wins) versus the Debt Avalanche (ranking by highest APR for mathematical optimization).
Learning Goals
• Compare the mathematical efficiency of the Debt Avalanche to the psychological velocity of the Debt Snowball.
• Calculate total interest saved and acceleration timelines using both methods.
• Formulate an optimized debt elimination schedule based on a consumer's behavior profile.
Student Facing Learning Goals
• Let's calculate whether it's better to pay off our smallest debts first for a psychological win or our highest-interest debts first to save money.
Student Facing Learning Targets
• I can explain the difference between the Snowball and Avalanche methods.
• I can calculate the interest saved by using the Debt Avalanche method.
• I can choose the right debt strategy based on human psychology.
Required Academic Standards
National Jump$tart Standards:
• Credit and Debt (Standard 1): Analyze the costs and benefits of various types of credit.
Glossary Entries
Debt Snowball: A debt repayment strategy where an individual pays off their smallest debts first to secure quick psychological victories.
Debt Avalanche: A debt repayment strategy where an individual pays off their highest-interest debts first to minimize total interest paid.
Minimum Payment: The required baseline amount that must be paid to keep a single loan in good standing.
Debt Acceleration: Applying extra cash flow on top of minimum payments to aggressively eliminate principal balances.
Lesson
Warm Up
4.10.1: The Multi-Debt Dilemma
Launch: Have students stand in randomized groups of 3 at vertical whiteboards. Present the prompt verbally or project it. Give them 4 minutes.
Synthesis: Select two groups to share. Establish the baseline: When a consumer has multiple debts, paying just the minimums means staying trapped forever. Extra cash must be focused surgically on one debt at a time.
Student Facing Task
You have $200 of extra cash this month. You owe money on a $500 medical bill, a $2,000 credit card, and a $15,000 car loan.
1. If you split the $200 evenly across all three debts, what happens to your principal balances?
2. Why is it smarter to throw the entire $200 at a single debt instead?
Activity 1
4.10.2: The Snowball Win
Launch: Keep students at whiteboards. Project the profile data. Give groups 8 minutes to run the math.
Synthesis: Have the class observe the boards. (Teacher Key: 1. Store Card is killed in 3 months. 2. They now have $150 total to roll into the medical bill ($50 minimum + $100 extra)). Explain how eliminating a whole bill eliminates a monthly obligation, freeing up cash flow.
Student Facing Task
Meet Chloe. She has $100 of extra cash flow a month. She chooses the Debt Snowball Method. Here are her debts:
• Debt 1 (Store Card): $300 balance ($50 minimum payment).
• Debt 2 (Medical Bill): $800 balance ($50 minimum payment).
1. If she throws her $100 extra at the Store Card, how many months until it hits $0?
2. Once the Store Card is eliminated, what is the new total monthly amount she can aggressively throw at the medical bill?
Activity 2
4.10.3: The Avalanche Optimization
Launch: Present the high-interest data. Give the whiteboard groups 10 minutes to calculate total interest costs.
Synthesis: Facilitate a class debate. (Key: Avalanche knocks out the 24% card first, saving massive compound interest. Snowball knocks out the 4% loan first, allowing interest on the 24% card to explode). Prove that Avalanche is always mathematically superior, but Snowball is often behaviorally superior.
Student Facing Task
Alex has two debts:
• Debt A: $500 balance at 4% APR (Student Loan).
• Debt B: $2,000 balance at 24% APR (Credit Card).
1. If Alex uses the Debt Snowball, which debt do they pay first?
2. If Alex uses the Debt Avalanche, which debt do they pay first?
3. Mathematically, which method saves Alex the most money over the next year? Explain why using the APR numbers.
Lesson Synthesis
Unit 4
Cool Down
Lesson 10
Student Facing Task
Debt Repayment Strategies: Snowball vs. Avalanche Methods