Your Complete Guide to the Debt Snowball Method

By Jackie Beck   Updated 08/16/2019 at 4:01 pm

Pay off debt faster with a debt snowballThe debt snowball method is the fastest way to get out of debt, hands down.

It can light a fire under you and rocket you forward like you wouldn’t believe. More importantly, it can help you stick with it until you can scream “I’m debt free!” with the best of them!

So if you’re ready to get out of debt for good, here’s exactly how to use the debt snowball method to make that happen. (Plus a little bit about why it works soooo well.)

How the debt snowball method works: The basics

To use the debt snowball method, you usually start out by organizing your debts from the lowest balance to the highest balance, regardless of interest rate.

(If the thought of doing that makes you want to explode because it doesn’t make sense math-wise, read “Am I bad at math too?”.)

You then pay as much as possible to the first one in your list. Chuck as much as you can scrounge up or earn toward that first creditor, over and above its minimum payment. You want to get it GONE.

At the same time, make only minimum payments to all of your other creditors. Do not try to send an extra $20 to each one. Only send in extra money to your main target. Pummel just that target debt with those extra payment snowballs.

Once your very first credit card (or whatever’s first on your list) is paid off, you’ll feel REALLY good. You’ll feel good even before that too, because you will see that it’s going down! Feeling good matters, because we like to keep doing things that make us feel good. That includes using a debt snowball.

The best part

The best part is: You’ll also end up with even more money on hand to send to the next one. That’s because you’ll no longer owe anything on the first one you targeted.

Over time, you begin to chuck more and more money toward each remaining target.

In other words, the amount of money you’ve got available to send in grows and grows, until eventually you’re making HUGE progress. Super fast.

You just really get on a roll, annihilating your debts by using the debt snowball method.

If you’d like to see a visual example of how this works, take a look at my short video. Then scroll down for directions on getting started with one yourself.

How to set up your own debt snowball

Hopefully by now you’re convinced that a debt snowball is an awesome method to use, and are ready to get started. If so, that’s great, because setting up your debt snowball is easy.

Here are step-by-step directions on how to do it:

Step one for creating a debt snowball

Make a list of all your debts and write down this information for each one:

  • The name of the debt
  • How much you owe on it right now
  • The interest rate
  • The due date
  • Your minimum monthly payment amount

You can do this using a piece of paper, a spreadsheet, an app like Pay Off Debt by Jackie Beck (which lets you play around with things and see how quickly you’ll have things paid off), or whatever you like.

Step two: Organize your debt snowball

Put your debts in the order you want to pay them off in. For reasons I’ll go into later, the best order is usually lowest balance to highest balance, unless you’re dealing with payday loans.

Note: If you put them in order from highest interest rate first, most people call that a debt avalanche. But it’s actually still a snowball as long as you complete the next steps too.

Step three: Stop borrowing

Yup, stop borrowing. That’s really the key to the whole thing, because you won’t get out of debt unless you commit to only using money you already have. That means no new debt. Even if it’s a great deal. It’s a greater deal to be free!

Step four: Make all the minimum payments

Make sure to make minimum payments to every debt in your list the entire time. If you can’t do this part yet, look for ways to make extra cash and find ways to cut back on your spending.

Step five: Pay extra to the first debt in your list

This is where the debt snowball starts. You want to focus all your efforts on the first debt in your list. So pay as much extra to it as you feel ok with, as often as you want, until it is gone. Mark any extra payments you send in as “principal only” so you can be sure they really do go to reduce the balance.

Note: Call your lender to see if they have any special things you need to do to make that happen, and to make sure you don’t have any prepayment penalties (Especially if you are paying off your house early.)

Once the first debt in your snowball is gone, take the money you had been sending to it (meaning any extra payment amount + the minimum payment) and start sending that to the next one in your debt snowball. In addition to that next debt’s minimum payment.

Do not spend it on something else, or go out and borrow more. Use that money to reduce your debt faster and faster.

Keep repeating these last two steps until you have everything paid off!

Now let’s talk about why it works. Because that’s where the magic lies.

Why the debt snowball method is such a great way to kick debt’s butt

Unless you ONLY have medical debt, being in debt usually means you didn’t want to wait to buy the things you wanted or needed. So you used credit to get them right away.

In other words, you’re not a fan of waiting around.

You’re probably not a fan of waiting around when it comes to getting out of debt either.

Don’t beat yourself up about this. Put that tendency to work for you instead!

The debt snowball method works because it starts you off on the right foot. It quickly shows you that you can succeed, and then it keeps you motivated along the way. You won’t have to wait years before you see progress.

Getting fast results with a debt snowball

If you’ve got a bunch of different things you owe varying amounts of money on — say, a thousand dollars here, or three thousand there — you’ll start off by making some quick progress with a snowball.

You’ll see results faster than you might imagine, AND you’ll feel good about what you’re doing along the way.

That means that instead of trying to get out of debt and then giving up, you’ll keep right on working at it because you’ll have proof that you can do it.

You’ll go from feeling stressed out and hopeless to hopeful. The debt snowball method is highly motivating, because seeing those small successes at first make you want to keep at it.

Especially if you organize things in the traditional lowest-balance-first order. That’s because you quickly make progress instead of feeling like you’ll never get anywhere. And when you see progress, you keep going. So not only does the repayment itself snowball, your excitement and commitment snowballs too, leading to still more progress.

It’s a great way to get out of debt.

Using the debt snowball method to cut years off your debt payment plan

So why does using the debt snowball method speed things up so much if you’ve got multiple debts? It’s simple. Instead of say, paying off a small credit card and freeing up fifty bucks a month to spend on something else — like dinner out this month — you keep sending that money to debt.

Basically, you’re staying focused on debt repayment, and you get it done.

Most people pay something off and think “Yay, now I can spend that money on <insert something else here>!”. Then they go out and buy a new car. Or they use it for fun money. I’m not knocking them; that’s just what often happens. But it doesn’t have to be that way.

If you keep chucking that money toward the next debt in your list instead of spending it or taking on new debt, you’ll get out of debt faster. Sometimes literally years faster.

Here’s an example of how it works

Pretend you’ve got three debts totaling $23,429. You’ve got:

  • A credit card with a $2370 balance at 21% interest, with a $71.10 monthly payment
  • A student loan with a $5689 balance at 6.8% interest, with a $43.50 monthly payment
  • And a car payment with a $15,370 balance at 7%, with a $370 monthly payment

If you don’t pay anything extra to any of them, don’t add to your debt, and stick to those minimum monthly payments, you’ll pay off your car loan first, then your credit card, and finally your student loan.

And it’s going to take you twenty years to do it.

You’ll also spend $31,643.21. (Because you pay more when you use debt — in this case $8214.21 more in interest than you would have if you’d pay cash.)

Use the debt snowball method instead, and you’ll be out of debt in 4 years and 11 months — a savings of more than 15 years and $3071.88.

Plus of course, you’ll have an extra $484.60 every month for the next 15+ years to do whatever you want with. (That’s the total of your minimum monthly payments in this scenario.) Think what you could do with that money. The answer, of course, is whatever you want.

Some people are shocked at what a difference it makes.

My favorite complaint

In fact, one of my favorite customer support questions/complaints for my Pay Off Debt app goes something like this:

These numbers are wrong! There’s no way I can get out of debt this fast! Either fix this or give me my money back, ok?

I love getting that question in my email because it means I get to explain just exactly how the debt snowball method’s going to speed things up for them.

Nothing like giving someone some really, REALLY good news. (“No, they’re correct, and based on what you’ve told me, you really can be completely out of debt in 5 years. Here’s why…”)

YOU can have good news too! Get started with a debt snowball today. And if you’d like help with the whole mindset/stop borrowing thing, sign up for my free email course below while you’re at it :)

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19 thoughts on “Your Complete Guide to the Debt Snowball Method

  1. I’m using the snowball method and I just paid off two of my credit cards in the past year. One more to go and then I am DEBT FREE! I can say it IS exhilarating!

  2. Good explanation! I’m using this method and it really does work. It keeps you motivated. Best wishes….

  3. Definitely a good principle I learned from Dave Ramsey and Larry Burkett (sp?). There are some interesting ideas on this, however, from blogs like and Tim Ferriss’s 4 Hour Workweek book/blog.

    Have you had a chance to peruse their views?

    I’m assuming here you’ve read the “Total Money Makeover,” and not to knock Dave Ramsey but it’s interesting nonetheless to see some opposing views and why they disagree (although I’m still living the Dave Ramsey way myself, almost got out of debt then some life happened).

    1. I’m on the email list for iwillteachyoutoberich, and really enjoyed the 4-Hour Workweek book. I’ve also read Total Money Makeover, but not until I was already out of debt except for our house. I’m curious why you view the 4-Hour Workweek as an opposing view though? I don’t recall that having much to do with debt one way or the other.

  4. This is really bad advice.

    It is a very basic mathematical exercise to show that the debt snowball method results in you paying a lot more in interest fees than you would pay if you put your attention on highest interest rate debts first. The argument here is that it is a psychological benefit. Well, sorry but I think paying off all debt much sooner is a much stronger psychological benefit than snake-oil repayment methods that take much longer for people to complete because they end up accruing much more interest. Once again, this is very basic mathematics and I suggest the author of this page learns some.

    1. It’s not bad advice to explain how a method that has helped thousands of people get out of debt works. I’ll address your objection in a post soon, since it’s a common objection, but for now just note that I said “To use the debt snowball method, you usually start out by organizing your debts from the lowest balance to the highest balance.” (Emphasis added.) The key point to the snowball is that you chuck as much as possible toward the first debt in your list, while making minimum payments on the rest. That debt can be any debt. Judging from Dave Ramsey’s track record though, I’d say more people are motivated by quick progress — which happens when you put the smallest debt first. Not that many people are likely to stick with things they don’t see progress on.

      1. The fact that it has worked for many people doesn’t mean that there isn’t another method that would have worked better, or would have worked for more people.

        You should ALWAYS pay the highest interest rate debt down first. Always! If you want something to motivate you, add up all the numbers (addition is not that hard), and watch it start shrinking more quickly than it has every shrunk, and in fact faster than any other way that it will shrink. Especially if you are on a tight budget, this will keep you the most salient during the debt pay down period, and will keep you from the least amount of trouble if emergencies come up and you start to not be able to pay it down as quickly later on. It will reduce your minimum payments by the most the quickest, giving you more head room, and you will pay off the total earlier than any other way. This is simply a fact.

        If the only counter to that is “but, motivation!”, then that is like encouraging a fad diet over regular boring and patience requiring exercise. And if you really need motivation, again, add up the total debt numbers and watch them drop.

      2. Chris and John, you are both completely missing the point and your arguments are flawed. Of course, it makes more rational sense to pay off higher-interest debt first. But paying off debt isn’t a math problem, it is changing ingrained behavior. When it comes to changing behavior, motivation is not only the most important factor, it is the only important factor. And for some reason, reducing the number of creditors in the Debt Snowball plan is more effective at changing behavior than reducing the overall debt.

        I could argue that the best way to pay off debt is to take on three jobs, sell everything of value, downsize your house and eat ramen until all of the debt is paid (higher-interest debt first). But how many people would follow that plan? It’s not effective at changing behavior, which makes it an ineffective strategy.

        If everything were as simple as constructing the most rational system, we would all be debt-free millionaires with six-packs. Just look at all of the comments on the message boards about this topic. The Debt Snowball plan creates a keystone habit, which in turn, creates other positive habits and behaviors that help people eliminate their debt more quickly. Both of you have eliminated the most important variables out of the equation.

  5. We are small business owners living almost a debt free life and we have Dave Ramsey to thank for that! Still plugging away at debt, but it’s getting smaller and easier to see the “finish line”.

  6. Thank you for this information. We are starting on our Snowball method this month! 27k (ish) to pay off and here we go!

  7. I don’t think it matters which debt is paid off first, high interest or low interest. I has to be what is best for your motivation. The key is to pay off one debt at a time and keep going until it is all done. Just don’t get back in the cycle of reusing the credit cards that you have paid off otherwise you are back to where you started. (Been there, done that!)

    1. I very much agree with you, it doesn’t matter just pay one off, move on to the other. Ppl here are trying to discredit the idea. If you have or believe in something better go on with it.

  8. We are starting our debt snowball journey with a lot of hope and trepidation! 80K debt, wish us luck!

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