The Debt Snowball
Pay off debt fast
The Debt Snowball is a method for paying off debt by listing all debts in order of smallest payoff balance to largest, and then paying the minimum payment on all debts except the smallest. The smallest debt is paid off first, and then the payment from that debt is added to the next smallest debt, creating a snowball effect. This approach is designed to provide quick wins and motivate individuals to continue the debt reduction process.
- List all debts in order of smallest payoff balance to largest
- Pay the minimum payment on all debts except the smallest
- Use the debt snowball method to create a snowball effect
- Focus on behavior modification and motivation
- Make significant lifestyle changes to achieve debt reduction
- List All DebtsList all debts in order of smallest payoff balance to largest, including debts with zero interest.Pro tipUse a debt snowball form to help organize debtsWarningDo not cheat by paying off larger debts first
- Pay Minimum PaymentsPay the minimum payment on all debts except the smallest.Pro tipUse any extra money to pay off the smallest debtWarningDo not miss payments on any debts
- Pay Off Smallest DebtPay off the smallest debt first, and then add the payment from that debt to the next smallest debt.Pro tipCelebrate quick wins to stay motivatedWarningDo not get discouraged if progress is slow
- Create a Snowball EffectContinue paying off debts in order of smallest to largest, creating a snowball effect.Pro tipUse the debt snowball calculator to track progressWarningDo not deviate from the plan
Steven and Amanda had $60,000 in student-loan debt and $35,000 in credit-card debt. They used the debt snowball method to pay off their debts and became debt-free except for their house.
Josh and Amy had over $169,000 in debt. They used the debt snowball method to pay off their debts and became debt-free except for their house.
The Debt Snowball was developed by Dave Ramsey as a way to help individuals become debt-free. It is based on the idea that paying off debt is not just about math, but also about behavior modification and motivation.