How To Use the Debt Snowball Method: Step-By-Step Guide - GOBankingRates

Many of the offers appearing on this site are from advertisers from which this website receives compensation for being listed here. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). These offers do not represent all available deposit, investment, loan or credit products.
Those looking to become debt-free will likely find success when adopting a financial strategy or method. The Debt Snowball Method, first popularized by personal finance expert Dave Ramsey, is one of these strategies. Find out if the Debt Snowball Method is the way forward for you.
Read: This Credit Score Mistake Could Be Costing Millions Of Americans
The Debt Snowball Method is a widely-held approach for paying down debt, along with other methods, such as the Debt Avalanche Method and debt consolidation. With the Debt Snowball Method, you categorize and pay debts individually, starting with the smallest and “snowballing” until they are all paid off. This allows you to feel the accomplishment of paying debt and encourages you to continue until you’re debt free.
Bonus Offer: Open a new Citi Priority Account by 1/9/23 and earn up to a $2,000 cash bonus after completing required activities.
How long it takes depends on the amount of debt and money you can put into debt repayment. The Debt Snowball Method may take more time than other methods because it prioritizes paying off the smallest debts first, not the ones with the highest interest.
The Debt Snowball Method may work better for some people than others. Understanding its advantages and disadvantages will help you decide if it’s the right fit.
Once you feel the satisfaction of paying off your first debt, you’re more likely to be motivated to continue, as people tend to stick to a payment plan if they’re seeing quick results. That is, you’re more likely to follow through on your commitment to becoming debt free when using the Debt Snowball Method.
Some of your larger debts may have higher interest rates than others, so this method might not be the most efficient. You may end up paying more interest than you would have had you prioritized paying off the debts with the highest interest rates first.
Bonus Offer: Find a Checking Account that Fits Your Lifestyle. $100 Bonus Offer for New Checking Account Customers.
The Snowball Method is a simple process. Think about how you would apply the following steps to your financial situation.
Record all your debts in order from smallest to largest.
Stay on top of your other debts by paying at least the minimum due.
Make only the minimum payments on all debts except the smallest one. Pay as much money as possible on the smallest debt each month until it’s paid off.
Put the money you used for the first debt toward your next smallest debt. This is the “snowball” part. The fewer debts you have, the more you can focus on paying off one debt instead of multiple minimum payments.
Continue paying your debts one by one, from smallest to largest. If you follow this process, you may find that becoming debt free is not as complicated as it may have seemed.
The journey to becoming debt free may seem intimidating, but paying off your debts might be the best investment you can make for your future. Now that you know about the Debt Snowball Method, decide if it’s right for you. Whether you choose this or another debt repayment method, the sooner you take your first steps, the closer you are to becoming financially secure.
Melanie Grafil contributed to the reporting for this article.

Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.
Share This Article:

Sponsored Links by Zergnet
Every day, get fresh ideas on how to save and make money and achieve your financial goals.
Advertiser Disclosure: Many of the offers appearing on this site are from advertisers from which this website receives compensation for being listed here. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). These offers do not represent all deposit accounts available.
Banking
Learn
Savings Accounts
Checking Accounts
Certificate of Deposit
Money Market Accounts
Credit Unions
Loans
Interest Rates
Reviews
Get Started
Best Savings Accounts
Best Checking Accounts
Best CD Rates
Best Money Market Accounts
Best National Banks
Best Online Banks
Best Regional Banks
Best Credit Unions
Best Bank Promotions
Find The Best Bank For You