Everything About The Debt Snowball Method Of Paying Off Debt

Are you ready to pay off your debt but have no clue where to start? 

Read the first post in my series about paying off your debt, then read through this series until you get to this post, our seventh in the series.

We’re finally ready to discuss one of the potential methods to pay off your debt.

Now that you’ve changed your money mindset and your money habits, you just need to pick the method or combination of methods that will work best for you.

Let’s get started with one of the most popular debt pay off methods, the debt snowball.

What Is The Debt Snowball?

The debt snowball is a term that was popularized by personal finance guru Dave Ramsey. It’s really simple to follow and that’s why so many people have had success with it.

Essentially, you take your list of debts that you owe (you made this list in our very first post in the series) and order it from the debt with the smallest balance owed to largest balance owed. As you always should, you’ll make the minimum payments on every debt you owe.

The key is that any extra money you have left will all be paid toward your debt with the smallest amount owed. This will result in getting rid of some of your debts quickly and give you motivation to continue your debt pay off journey.

Once you pay off your first and smallest debt, you’ll take all of your extra money and the original minimum payment from that loan and use that money toward your debt with the next smallest balance.

Continue rolling these amounts over as you eliminate loans and the amount of the payments you’ll be making will increase. Eventually all of your consumer debt is gone. Then, if you want, you can attack your mortgage, if you have one.

If you haven’t picked up on the metaphor yet, as you pay off each debt the amount of money you’ll apply to the next loan you’re paying off will increase, much like a snowball rolling down a hill.

Pretty cool, huh? While this method is psychologically motivating because you’ll be paying off individual debts quickly in the beginning, it isn’t the mathematically optimal way to pay off your debts.

The mathematically optimal way is called the debt avalanche, which we’ll discuss next week. For now, let’s just focus a bit more on the debt snow ball and the pros and cons of this method.

Debt Snowball Pros

  • This method is really easy to follow. It doesn’t involve making any decisions other than the decision to follow the debt snowball methodology.
  • You’ll pay off your first debt pretty quickly. That will give you motivation to pay off the next debt faster.
  • As you pay off each debt quickly in the beginning, you’ll quickly begin to see the size of the payment on your smallest debt (your debt snowball) grow which is very encouraging.

Debt Snowball Cons

  • The debt snowball is not the mathematically optimal way to pay off your debt. You could end up paying off a 0% car loan before you paid off a 25% credit card loan if the car loan had a smaller balance.
  • The debt snowball can over simplify your debt situation. In reality, there are other factors to take into account when deciding which debt you should pay off first.

As you can see, the debt snowball method has some great benefits but it has its flaws as well. If you’re majorly overwhelmed and just want to see some solid progress, this method might be best for you.

However, if you’re a more logical person who doesn’t need to see a psychological payoff early on in the process, you might want to consider another debt pay off method.

Next we’ll discuss the debt avalanche. The debt avalanche is an alternative to the debt snowball debt pay off method that makes more sense for logical minded people to follow. You can read about it here.

Have you ever used the debt snowball method to pay off debt? Did it work for you, or did you prefer another method? Do you have any questions about this method that I could answer for you?

Like What You See?

Join the other readers who have signed up for our email newsletter! No spam, just periodic updates to help improve your finances!

About Lance Cothern

Lance Cothern, a Certified Public Accountant (CPA) licensed in the Commonwealth of Virginia, is the founder of Money Manifesto. You can read more about him here or connect with him on Facebook, Twitter, Google+ or Pinterest.


  1. When we paid off $52,000 in debt in 18 months, we used the debt snowball and it was amazingly effective. It was great to conquer the little debts first because that gave us momentum moving forward.

  2. You can use the debt snowball with the interest rate cards as well. The only drawback is that it may not give you the more immediate gratification if the higher interest rate debt is also the larger balance. But the concept still works either way.

  3. I paid off my debt with the highest interest rate first. But smaller debt, is easy to knock off. And it is a great feeling.

  4. Love the snowball method of paying off debt. It’s so much more motivating seeing the debts fall off the list than having to work on higher-rate debts. I actually found that it wasn’t that much different in total interest paid for my debts because a lot of the high-rate credit cards were also my smaller amounts.

    Great series on debt.

Share Your Thoughts