Debt Snowball Explained | How To Pay Off Debt Using the Debt Snowball

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I thought we’d better sneak this post in before it gets too warm – a snowball is always easier to visualize in the winter.

Editor’s Note: What a great line, eh?  Unfortunately, I wrote this post months ago, but since it was such a good line, I decide to keep it in this post even though it is now the hottest time of the year.

What is the Debt Snowball?

The debt snowball is a common approach or strategy for how to pay off your debts.  It is commonly identified as Dave Ramsey’s method, but Ramsey was just the one who popularized it.

The Illustration:

Take a small ball of snow and roll it around your yard on a day when the snow is a little softer.  The sticky snow picks up more and more snow, and so it becomes bigger and bigger as it is rolled around the yard.

The debt snowball is a method that allows you to gain more and more momentum as you pay off your debt.

How Do You Set Up A Debt Snowball?

I have a free downloadable Excel debt snowball spreadsheet.

Basically, you need to get a list of all your debts and the total amount owning.

List them in order from the smallest outstanding balance to the largest.  Pay minimums on everything except the account with the smallest balance.  Once you pay off the smallest balance, take what you were paying on the smallest account and now apply that to the next smallest balance.

For example, if you were paying $125 per month on the smallest balance and $57 on the second smallest, when you pay off the smallest, take that $125 plus the $57 so you can now pay $182 per month on the next debt.  Keep applying payments to debts until you have everything paid off

Is there A Better Method Than the Debt Snowball?

This, my friends, is the million dollar question.  Some say yes and some say no.  Mathematically, it would make more sense to pay off the loan with the highest interest rate first.  However, the debt snowball wants to capitalize on passion and focus, not math sense.  Ultimately, I think passion can make up for any mathematical disadvantage.  In the end, there is no way to conclusively find out which its a stronger factor – math or focus.

7 Tips For Successfully Paying Off Debt Using A Debt Snowball

  1. Intensity is your best friend.  Use it to your advantage.
  2. It is important for both the husband and wife to be on board with the plan.  This is especially true when you have marriage and money problems.
  3. Set up a worksheet and have your projected debt payoff date in front of you.  Aiming for a goal will always produce better results.
  4. Make a commitment to use any unexpected money towards debt repayment.  Here’s how to set up a budget for unexpected income.
  5. Sometimes you will need to get a part time job just to get the initial traction.
  6. Setting up the debt repayment plan and getting motivated will take more effort to start than maintain.  Leave yourself time to get the snowball started rolling.
  7. Your income will be your greatest tool through this process, so be sure you are keeping a budget.

What are your thoughts about the debt snowball?  What method do you use for getting out of credit card debts and other debts?


  1. says

    Hey Craig, nice explanation.

    I think simplicity is the key to the snowball…. When you knock off one card at a time you make your debt situation simpler each time. Paying off the biggest debt first means it stays complex for longer…. Of course the mental aspect of paying off one more debt is extremely important too.

    • says

      @Money Obedience
      I agree. In my case, the thing that would motivate me the most is paying off high interest payment. However, we aren’t all motivated by the same things.
      The snowball has too big bonus marks. Simplicity, as you mentioned, and a proven track records. At least in my circles most people who are getting out of debt used the snowball.

  2. says

    Different strokes for different folks. The debt snowball can work very well for some people and these people should use it. I know that it would bother me too much to keep expensive debt while I am paying off cheaper debt that is easier to pay off. I think it can also make sense to use a mixture. Pay off really small debts first and then tackle expensive debt. That way you get the emotional boost by getting rid of small debts right away, but it won’t cost you too much since you get rid of expensive debt before you get rid of cheaper but smaller debt.

  3. says

    This is exactly what I did. The hard part is staying of of debt. I am on my second go round. The only good thing about this it that once you have done it, you can do it again. I only have one more credit card to pay off. Yea Me!

  4. Gholmes says

    Definitely agree with setting a goal #3 and charting it in a worksheet. That was key for us and we posted the chart on the fridge where we saw it every day.

    I’m the only math nerd in the family so the fact that we had small successes up front got the rest of the family emotionally involved. The celebrations after killing a specific debt helped with “sorry no dinner and movie out nights”. At the end all were on board and there were no sorrys only the fun of knocking off the debt.

  5. Chuck says

    There is one other benefit to using the debt snowball method. If you pay off your smaller debts first then this provides a nice buffer in case “Murphy” comes calling. Example below:
    Credit Card at 19% interest rate – $350 minimum payment
    Credit Card at 18% interest rate -$150 minimum payment
    Credit Card at 17% interest rate -$50 minimum payment

    Lets assume you have an extra $100 to throw at the debt snowball. Going after the 19% makes good financial sense, but knocking out the smaller ones frees up money when things don’t go according to plan. So lets say you blow a couple of tires on your truck … you need $200 to fix it …. If you had already knocked out the smallest minimum payment and begun making progress on the second smallest you could possibly pay for the new tires without having to dip into your emergency fund. You would just need to pause your debt snowball and make the minimum remaining payments.

    Just another thought … there are ways to play with this but the risk of “Murphy” showing up should not be discounted.

  6. says

    To my opinion, using snowball method is a very good way to pay off the debt. There are 2 methods just like snowball and avalanche, everything depends on a person but for me snowball method suits better. Totally agree that before choosing a debt elimination method it’s important to make a list and write everything down. It’s necessary to know the way you are going to pay off the debt and what method will suit you and your particular situation the best.

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