debt snowball method

The Debt Snowball Method: How and Why It Works to Pay Off Debt



We’ll explain what makes the debt snowball method one of the best ways to conquer your personal debts and the psychology behind it.

Most people have some level of debt these days. Having too much can be stressful, especially when you’re trying to manage several expenses and recurring bills. 

The good news is once you pay it off, it’s gone

debt snowball method
Featured Photo by Jelleke Vanooteghem on Unsplash

There are a few ways to approach paying off your debt. One of the most popular is the “debt snowball method” because of how effective and motivating it can be. 

What’s the debt snowball method? 

Line up all your debt amounts from smallest to largest. Commit to paying the minimum amounts on all of them, then put any extra money toward the smallest debt

After you pay it off, move to the next biggest amount, and repeat until all your debts are completely paid. 

So, it’s like a snowball because it starts small and as it keeps rolling, grows and grows until you’ve thrown a huge snowball at your debt. 

How to use the debt snowball method

To start, make a list of every amount you owe, and arrange them smallest to largest

Be sure to include everything except your mortgage, which is typically seen as “good debt.” 

debt snowball method
Photo by NORTHFOLK on Unsplash

Include things like: 

  • Student loans
  • Personal loans
  • Credit cards
  • Auto loans
  • Tax liability
  • Home equity loans
  • Medical bills
  • Any debt in collections

Once you have everything, calculate the minimum payments and add them up. After reviewing your budget, keep paying the minimum on everything, then add any extra payment to the smallest debt until it’s gone.  

For example, instead of paying a little extra on all your debts, focus on the bare minimum, and put the rest toward building your snowball.

Why is the debt snowball method so effective? 

By lining up your debt amounts from smallest to largest, you build up the confidence to keep going as you see your balances drop to zero

The effect is mostly psychological, but it can be incredibly motivating to build momentum this way. Often, taking the first step is the most difficult part of any journey. But once you’re on your way, you won’t want to stop. 

Should you use it?  

If you have multiple debts, and the thought of them makes you feel overwhelmed, the debt snowball method might be the motivation you need to start tackling them one by one. 

If you decide to try the debt snowball method, be sure to go at a pace that’s comfortable for you and celebrate every win. That could be anything from purchasing a new item of clothing to going out for a nice meal. If you build in rewards for every accomplishment, it could give you the motivation to stay the course and conquer all your debt.  

Plus, you might be surprised at how quickly you can pay off your debts once you begin focusing on them! That’s one of the reasons this way of paying off debt is so popular.  

Bottom line 

If you’re ready to take the first step toward paying down your balances but don’t know where to begin, the debt snowball method might be for you. 

It’s built on the principle that small actions add up to big gains and many people find it motivating and rewarding. 

Like any big goal, be sure to make it fun for yourself and add in rewards along the way. This is a great place to begin and hopefully helps you build a big snowball to throw at what you owe. 

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