Debt Snowball Method
What Is the Debt Snowball Method?
The debt snowball is a repayment strategy where you pay off debts from smallest balance to largest — regardless of interest rate.
Once the smallest debt is paid off, you roll that payment into the next smallest.
Momentum builds like a snowball.
Why the Debt Snowball Works
It focuses on:
- Psychological wins
- Motivation
- Behavioral momentum
While it may not minimize interest costs, it can increase consistency.
Example
Debts:
- $500 credit card
- $2,000 personal loan
- $10,000 auto loan
You eliminate the $500 first, then move to $2,000, then $10,000.
Related Terms
