What is the Debt Snowball Method

Have you stumbled upon this page wondering what the debt snowball method is?  The debt snowball method is simply a way to pay down debt.  While there are many ways to pay down debt, we feel the snowball method to be one of the very best and easiest methods to implement.  To be sure, it is by far my most favorite way to help folks get started by paying down debt.  Additionally, having zero unsecured debt is key to becoming financially independent.

Getting Started With The Program

First, in case you’re thinking it, no: it doesn’t involve any real snowballs (But, wouldn’t that be fun!).  Rather, the snowball method first requires that you create a list of all your debts in order of the balance.  Then, you start by paying off the account with the lowest balance first.  To be sure, you would only make the minimum payments on the rest of the loans.

Gathering All Your Credit Balances

For instance, a hypothetical situation might look like this:

  • Mortgage Balance: $240,000
  • Car Loan: $18,000
  • Line of Credit: $9,000
  • A – Credit Card: $5,000
  • B – Credit Card: $2,000
  • C – Credit Card: $800

Implementing the Debt Snowball Method

In this case, you start by paying off credit card C first (i.e. as your initial goal).  Then, give yourself a big pat on the back as a first achievement!  Following that, work on Credit card B, then A, etc.

You see, since you’d have no more payment on the accounts (Starting with credit card C) that are paid off, the idea is that you then use that money to pay off the other accounts – thus supercharging the payoff period!  In addition, by simply paying off your debts, your credit score will improve.

Is The Debt Snowball Method The Best?

Is the debt snowball method financially optimal for paying off your creditors?  No.  To be sure, paying down your debts with the highest interest rate would be mathematically and finally better.  However, in my own experience, this is my favorite debt-reduction strategy.   Why? It provides the instant gratification needed to see it through to the end!


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  1. Pingback: How to Become Financially Independent | The Financially Independent Millennial

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