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What is the debt snowball method and how does it work?

Curious about Handling debt

What is the debt snowball method and how does it work?

The debt snowball method is a debt reduction strategy in which you prioritize paying off your smallest debts first, while making minimum payments on your larger debts. Once your smallest debt is paid off, you take the amount you were paying on that debt and apply it to your next smallest debt, in addition to the minimum payment you were already making. This continues until all of your debts are paid off.

The idea behind the debt snowball method is that paying off your smallest debts first can give you a sense of accomplishment and motivation to continue paying off your other debts. As you pay off each debt, you have more money available to pay off the next one, which can help you build momentum and speed up your overall debt repayment process.

To use the debt snowball method, you will need to:

1. List all of your debts, from smallest to largest, including the balance owed and the minimum monthly payment for each.

2. Make the minimum payments on all of your debts except for the smallest one.

3. Put any extra money you have each month toward paying off the smallest debt, while continuing to make the minimum payments on your other debts.

4. Once the smallest debt is paid off, take the amount you were paying on that debt and apply it to your next smallest debt, in addition to the minimum payment you were already making.

5. Repeat this process until all of your debts are paid off.

By following this method, you can create a plan to pay off your debts systematically and efficiently, while also staying motivated and encouraged along the way.

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