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  • Writer's pictureAdam and Bronwyn

Road to Debt Free with Debt SnowBall Method

It may feel overwhelming to try to pay off your debt, but there are methods that can assist you to pay off debt. There are typically two different strategies to use. Since everyone's debt situation is unique, there is no right or wrong answer when it comes to the most effective technique. Even combining both approaches is possible occasionally. You are in charge of choosing the process that might be the best suited for your circumstances based on your motivations, but today, we will focus on the SnowBall method.


With the debt snowball method, you pay off debt from smallest to largest, building momentum as you pay off each outstanding number. When the smallest debt is fully paid off, the minimum payment you were making on it is rolled into the next-smallest debt payment.

Step 1: Regardless of interest rate, order your loans from smallest to greatest.

Step 2: Pay the bare minimum toward all except the smallest of your debts.

Step 3: Make the biggest payment you can on your smallest debt.

Step 4: Repeat until all debts have been paid in full.

Now, before you get into a debate about interest rates, hear us out. It will take a while before you start to see a dent in that insane sum of yours if the debt with the highest interest rate is also your largest. You'll be ecstatic when you pay off your smallest loan quickly, though, if you stick to the plan (without stressing over interest rates). Your drive to keep working hard and cross the finish line debt-free will be fueled by your excitement. I will elaborate on this later.

The Debt Snowball Method: Why Does It Work?

The debt snowball works because habit modification is the key. To get out of debt, you don't need a business degree or a degree in math. In this equation, hope plays a bigger role than math ever will.

20% of intellectual knowledge and 80% of behaviour go towards financial success. There is no stopping you if you can persuade the person in the mirror to alter their behaviour!

Interest rates, what about them?

You won't pay off your school loan quickly if you start making payments on it first because it is the biggest debt. You'll notice that the debt is decreasing, but you'll soon tire and cease making additional payments. Why? because it takes so long to gain a victory! Additionally, you will still be bothered by all of your other little debts.

However, you make quick progress when you pay off your least expensive debt first. Your relationship with that loan is over. Soon after, there will be a second debt, and then another, and another. Instead of making little incremental minimum payments, you're suddenly paying hundreds of dollars a month toward your bills. You'll be more likely to stick with your snowball once you see it in action. Before you know it, you'll be exclaiming, "I'm debt-free! "without delay.

Debt Snowball: An Illustration

Working through a real scenario is the quickest approach to understanding how to use this technique. Assume you owe the following four debts:

  1. $500 medical bill—$50 payment

  2. $2,500 credit card debt—$63 payment

  3. $7,000 car loan—$135 payment

  4. $10,000 student loan—$96 payment

You apply the debt snowball strategy, paying only the minimum on all but the $500 medical cost. As a result of your intense focus on your objective, you decide to take up a side job that will earn you an additional $500 each month, which you will add to your snowball.

Since you're paying the medical bill of $550 a month (the $50 minimum payment plus the additional $500), the debt is paid off in a single month. Now that you have $550 extra, you can use it to pay off your credit card debt, bringing the total amount due to $613 ($550 + the $63 minimum payment). You'll be joyfully waving that credit card off in about four months.

Then, you'll slap that auto loan in the face with a $748 monthly payment ($613 plus $135). You'll be driving off into the distance in a car that you actually own in 10 months.

You can dedicate $844 a month to paying down your largest debt, the dreaded student loan. Thus, your final payment to Sallie Mae is due in 12 months. Goodbye, Sallie!

You'll have paid off $20,000 utilizing the debt snowball method in just 27 months if you put in the necessary effort and sacrifice, add extra funds to the snowball, and remain committed to your objective. Isn't it incredible!

Maintaining Motivation While Working the Debt Snowball

The disadvantage of the debt snowball strategy is that it requires effort.

But it functions.

Alright, you're up for it. You can force yourself to finish paying off debt, just like the snowball picking up speed as it rolls down the slope. As you proceed, paying off each obligation, observe your momentum and success develop.

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