The average debt of the typical American household is $145,000

With so much debt, people are struggling more than ever. Many want to pay off their loans, but looking at that number is so intimidating. How can you really get out from under your debt and take control of your financial health?

One option that is proven to be successful is the debt snowball. This method is great for maintaining motivation and momentum. But what is it and how do actually you do it?

In this post, we’ll go over what the debt snowball is, how to use it, and how it compares to some other debt payoff methods. 

Keep reading to learn more!

What Is the Debt Snowball?

The debt snowball method is a debt reduction strategy that is used by paying off your debts in order of the smallest to the largest. Paying off your debts like this helps you to build momentum as you go, growing your “snowball” with each debt paid off. 

You will start with the smallest debt and put any extra money you have each month towards that debt until it’s paid off. It’s important that while you’re doing this you still pay all of the minimum monthly payments on your other larger debts. Missing a monthly payment can be very detrimental to your overall financial health.


1. List Your Debts

The first step in the snowball method for debt payoff is to list out all of your debts, excluding your mortgage, in order from the smallest to the largest. Going after the smallest amounts first allows you to get quick wins in the beginning when you need motivation most. 

In this list, you should also include other relevant information about the debts including the minimum monthly payment and the due date.

2. Make Payments

The second step is to start making your payments. First, pay all of the minimum payments and make sure they’re all covered, then put any extra money you can towards the smallest debt. 

This is a good time to look at your budget to see what extra money you may be able to find to add to your debt payoff. See if you can find anywhere where you can lower your expenses. You may be able to negotiate your bills for a lower rate, especially if you’ve been a long-time, loyal customer.

You may also want to consider getting another job as a way to bring in more money to help pay off your debt quicker. This isn’t necessary though, as your snowball will still continue to grow after paying off the first debt, even if you didn’t have anything extra to contribute to it.

3. Roll the Snowball Into the Next Debt

After paying off your smallest debt, it is time to move on to the next smallest. You will now be adding all of the money you were paying to your first debt to the minimum payment you were paying on the second debt.

4. Repeat

Continue to repeat this process until all of your debt is paid off! 

As you continue to pay off debt after debt, your snowball will get bigger and bigger, just like a real snowball collects snow to go from a small ball to a large boulder. 

Why Does It Work?

The debt snowball method is great for helping you to change your behavior, which is part of why it works so well. It encourages you to change your money habits by putting any extra money towards your debt rather than towards other discretionary purchases. 

Since you earn quick wins by attacking the smaller debts first, it helps to solidify this behavior in you since you see the benefits right from the beginning. 

This motivation is critical for paying off all of your debt because when you only look at the numbers and don’t have a plan of attack to pay it off, it can feel like it’s not actually possible.

When people get discouraged like that it is too easy to simply go back to only making the minimum payments and simply accepting the debt is here to stay.

Compared to the Avalanche Method

The snowball method is often compared to the avalanche method. This is another popular method for paying off debt but has some drawbacks when compared with the snowball.

The avalanche method is when you list the debts in order of their interest rates from the highest to the lowest. You then follow the same process as the snowball method but instead focus on paying the highest interest rates off first.

While this method will likely save you money in the long run, it doesn’t have the same built-in motivational help that the snowball does. If your debt with the highest interest rate is a large debt, it is easy to get discouraged when you’re paying so much each month towards it, but not really seeing the progress.

Debt Consolidation

If you have multiple high-interest loans you may want to consider a debt consolidation loan. This allows you to apply for a personal loan with a lower interest rate, that you would use to pay off the high-interest debt you currently have.

You will wind up with the same amount of debt but at a lower interest rate. This means a lower monthly payment and less paid in interest over the lifetime of the loan. You can learn about the process of getting a personal debt consolidation loan here.

It’s possible to consolidate all of your debt this way, but if you still wind up with multiple debts, then it’s time to put the snowball to use.

Start Paying Off Your Debt Today

Having debt can have a massive impact on your life and your financial and mental health. By using the debt snowball method you can take control and begin paying off your debt today.

If you’re interested in a loan for debt consolidation, contact us today!

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