The Debt Snowball Method Explained

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Debt Snowball Method

The debt snowball method is a way to repay by tackling smaller debt balances first. After a smaller debt is paid off the payments are then applied to the next smallest debt balance and so forth. Think of your payment to one card increasing (like a snowball growing larger as more snow is compacted) each time you’ve paid off a balance.

The idea is that your momentum will increase as you see one credit card or loan paid off after another regardless of interest rates. The feeling of accomplishment after paying off one debt will lead you to pay off another.

This method might not make the most mathematical sense since potentially higher interest rate cards with higher balances continue to accrue interest. But, this method focuses on a motivation to get rid of one credit card balance sooner rather than later.

How to Use the Debt Snowball Method

  1. List all your debts with the smallest balance first.
  2. Focus on complete repayment of the debt with the smallest balance first while making minimum payments on the other debts.
  3. Apply the payments from the first debt (now paid off) to the next debt (row 2) and so on.


Credit Card 1 – $500 – $25

Credit Card 2 – $6,300 – $146

Credit Card 3 – $7,000 – $200

In this example, you would pay as much as you can on credit card #1. Once paid off, you would use the $25 and add to the minimum payment of credit card #2. This would become a payment of $171. You can choose to add more to the payment as well. While paying off credit card #2 you’d continue to pay the minimum on credit card #3. Once done paying off credit card #2, you would then use the payments from #1 ($25) #2 ($146) and #3 ($200) to make the monthly payment on credit card #3. After strict adherence you’ll find you’ve snowballed your way out of debt.