5 Steps to Using the Debt Snowball Method

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How the Snowball Method Works

The term “get the ball rolling” can be applied to many areas of life. You might get the ball rolling on a difficult work project, home repair, or personal pursuit. It means starting simply and allowing your initial efforts to pick up steam over time. Isaac Newton once said that an object in motion will stay in motion and that is true for projects. Once you start your project and get it going down the path to success, the next thing you know that difficult project is complete.

Coined by financial guru Dave Ramsey, debt snowballing is the same concept. It refers to a method of eliminating debt where you start simply and let your work gain traction over time. It’s a great way to find the motivation to eliminate debt, where it was once lacking.

  • Step 1) List Your Debts from Smallest to Largest: To get the ball rolling, take a closer look at your debts. List them in order of payoff amount with the smallest amount on top and the most burdensome on the bottom. For example, you might have a credit card balance of $2,000, a student loan for $10,000, and several debts in between. 
  • Step 2) Make a Budget: Take the time to review your budget, or if you don’t have one, it’s never too late to make one! Sticking to a budget can be hard, but the rewards are well worth it! Tracking your finances and planning them out are the best way to take control of your money. The snowball method only requires a small portion of your budget to get started – before you know it, the ball is rolling in the right direction! 
  • Step 3) Make Minimum Payments on Your Debts: Now that everything is set up, it's time to get things in motion and start the process of paying off your debts. The bulk of your focus and money is going to be on your smallest debt, but that doesn’t mean you can neglect the others. Be sure to make the minimum payment on all of your accounts so you can avoid running into problems, like your credit score dropping or getting late fees. 
  • Step 4) Pay as Much Possible on Your Smallest Debt: Once you have your finances figured out, it’s time to start the process of paying off your smallest debt. Let’s say you have an extra $200 in your budget to pay down your debt. Put that toward eliminating your smallest debt. By focusing on your smallest debt first, you can eliminate it fast and start to gain momentum. Once you’ve paid that smallest debt off, keep the ball rolling by putting all the extra money toward your next smallest debt.
  • Step 5) Repeat Until Each Debt Is Paid in Full: The process goes on and on until all your debt is paid off. By snowballing your debt payments, your initial budgeted payment eventually becomes an unstoppable, debt-eliminating force, rolling its way toward financial freedom.

Why Does The Debt Snowball Method Work?

The debt snowball method works for two reasons. It’s simple and offers motivation in the form of quick wins. And sometimes, that’s what people need. Life’s complicated and full of hard decisions, so letting the snowball method do its thing slowly but surely might be the best choice!


This infographic shows how the snowball method works


Is a Debt Snowball For You?

There’s a nice simplicity to the snowball method for paying off debt, but what works for one person may not work for another. People are unique, and their individual financial approaches are a reflection of that. Research online, ask around, and if you have the money ask a financial advisor. Do your due diligence to find what works best for you.

How to Perfect the Snowball Method to Pay Off Debt?

If you’re interested in trying the snowball method, here are a few more tips to get the best payoff.

  • Build an Emergency Fund: Paying off debt is important, but take the time to ensure that you have a financial cushion in the shape of an emergency savings fund that can help with surprise expenses. Having that cushion can give you the time to make the best financial decisions possible and maybe avoid more debt in the long-run.
  • Stay On Top of Your Current Bills: In the same way you should stay on top of an emergency fund, don’t forget to take into account your current bills when creating your budget. Only pay as much as you can toward your debts without interfering with things like housing, medical, or other necessities.
  • Track Your Spending: Tracking your spending is a very important step when it comes to sticking to a budget. Know what you’re spending your money on and whether or not it really fits into your budget.
  • Prioritize Wants vs. Needs: Keeping in line with tracking your spending, you don’t need to cut all the fun things out of your life until you get your debt under control. However, you may need to be content with going to your favorite restaurant once a month instead of once a week.

Debt Snowball Method Conclusion

The debt snowball method can be a great way to find the motivation to eliminate your debts. Be aware that this method doesn’t necessarily eliminate your highest-interest loans first, such as the avalanche method, if you’re concerned about high interest rates adding up. But, for those looking for a simple way to get the ball rolling on the difficult process of debt elimination, the debt snowball is a great place to start.