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Using The Debt Snowball Method to Eliminate Your Debt


One of the hardest things about excess debt is the feeling of being overwhelmed and not knowing how to get out of it. If you have accumulated this debt from credit cards, student loans, car loans or something else you might be feeling like this. But the key to eliminating it is to find an organized strategy to pay off debt; the debt snowball method offers exactly that.

What is The Debt Snowball Method?

Picture a snowball rolling down a hill; it picks up momentum, as it goes down it gets faster and bigger. This metaphor is a representation of how the strategy works.

Once you’ve paid off the smallest debt, you tackle a bigger debt, and then an even bigger one and so on and so forth.

The debt snowball is a structured method which revolves around you paying off the debt with the smallest amount owed first. Once the smallest debt is paid off you use the amount you were paying towards paying off the next biggest debt and so on.

 You can also arrange your debts so that you start paying the highest interest rate first.

Mathematically speaking paying off highest interest first will save you more money over the long run.

But…psychologically speaking it is more powerful in your head to get rid of a debt completely, even if it’s a small one. This is why I recommend here to start with the smallest one…but it’s your choice.

Step by Step Instructions

Grab yourself a piece of paper or use a spread sheet.  You are going to need three columns. The first column will list what your debt actually is i.e. credit card, etc.  

The second column will state your outstanding balance – the total amount you owe.

And finally, the third column needs to list your minimum payment amount – this is the bare minimum you have to pay off each month.

When listing your debts you need to do them in the correct order; start with the smallest debt first and work your way down to the biggest. It should look something like this:


(NOTE: for simplicity, these are sample scenarios that don’t take into consideration fees, accumulation interest or other charges. I just want to illustrate how the method works so don't get bogged down in the details.) 

When it comes to paying off your debts each month you will pay the minimum monthly payment to all of those on your list except the first one (the smallest amount).

For the smallest debt you will pay the minimum plus you will find all the money you can to add to the extra payment.  

I have used $100 in the above example. So if you pay $115 every month towards the Mastercard debt it will be payed off in 13 months.The more you can pay the quicker you pay it off.

Now for the good part… 

Once you have paid off the first one, you will then use the amount you were paying on the first one and add it to the second debt in the list.  

So in our example we would take the $115 we were paying on the Mastercard and along with some more extra money we found in our budget we make that extra payment a total of $150:


Note that the balances on each debt (Total Owed column) have also been going down because you have been making minimum payments on them.

Once you have paid off the second debt you will once again take that amount and put it towards the next debt. In our example that would be the car loan 1.



And so it goes…the snowball effect takes place.

Remember, that the more money you find towards the extra payment the quicker you will pay that debt off. Have I said this enough times?

Also make sure you use any extra money towards the smallest debt. You might be tempted to make more than minimum payments towards the other debts but I need you to follow the method, it works! 

Focus all your energy on the smallest debt and get it paid as soon as you can then move on to the next one… 

To conclude, the debt snowball method is a sound way to pay off debt. It works because it allows you to achieve a small victory first and that builds momentum to keep going towards the bigger ones. This provides a major motivation boost in your head that will keep you going. 

You will also see that once you get started with the debt snowball method you will suddenly find more money…somewhere…anywhere to throw at your debt and reach debt freedom!




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Thanks to Celina Jones from Consolidated Credit Counseling in the UK for her contribution to this article.


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