Using The Snowball Method To Eliminate Your Debt Quickly And Efficiently

The Snowball Debt Method is a relatively quick and easy way to eliminate your debt in an organized manner. Like a snowball gaining momentum down a hill, start from the smallest debt and systematically work your way to the largest.

Debt Snowball Method

Using the Snowball Method to Eliminate Debt

Debt is no easy burden to carry. Although most people have at least some debt, it is not something anyone wishes to have. While it may seem that debt is a constant that you can never get rid of, there are certain steps that you can use to eliminate your debt. However, if you truly want to eliminate your debt in a simple and efficient manner, one of the best techniques for this would be the snowball method.

The snowball method is a debt-elimination technique named such because of its similarity to a snowball falling down a mountain. By getting bigger and gaining speed, the snowball method follows its name by paying off smaller bills first and then moving up one by one to eventually eliminating your largest bills.

The method is simple in that it ignores other factors such as interest rate and solely focuses on the amount of balance owed. The snowball method can be broken down into four easy steps that when followed, should lead to the elimination of one’s debt.

Step 1 – Organize Your Debt

In order for the snowball method to work, you need to identify and organize all of your debt. Create a list of all your current bills, from credit card to loans. Lay them all out and order them, with the first one being the smallest balance you owe, and the last one being the largest balance. AT this stage you can ignore other factors such as interest rate.

Step 2 – Minimum Payments

Once you have organized all of your bills from least to greatest, you need to identify your minimum payments for all your balances. Once you have figured out all of your minimums, you need to do some calculations. Figure out how much money you will need to pay all of your minimum payments, except for your smallest bill.

Once you have figured out the total amount, calculate how much money you have left in your budget after subtracting the total amount for minimum payments. This will be used in Step 3 below.

Step 3 – Paying the Smallest Debt

Using the money you have remaining in your budget, you will begin paying your smallest debt off. Be sure not to short yourself on this payment. The goal is to pay it off as quickly as possible, so in order to do that, you must be paying a good amount more than the minimum. Continue to pay off your smallest debt until it is paid in full and the debt is eliminated.

Step 4 – Advance and Repeat

Once you have paid off your smallest balance, you can advance to your next smallest balance. Using the money you once used for your smallest bill, apply the extra money in combination of your minimum payment. Continue this process until you have paid off all your balances in full and are debt free!



  • Credit Card A – $1,500 balance; $40 minimum
  • Car Loan – $5,400 balance; $250 minimum
  • Student Loan – $7,200 balance, $300 minimum
  • Credit Card B – $800 balance, $20 minimum

Step 1

Looking at the debt above, you can see that Credit Card B is the smallest loan amount, followed by Credit Card A, then the Car Loan, and finally the Student Loan. Having identified and organized the bills, you can then move onto the next step.

Step 2

Excluding Credit Card B, as it is the target loan to pay off, you will need to total all of your minimum payments. In this case, it will be $590 (40+250+300). Now that you have your minimums totaled, you will need to calculate how much money you will use to pay off your smallest loan.

In this scenario, you will have $800 to use for debt out of your total budget. Subtracting the minimum payments, you are left with $210 to put towards your smallest debt.

Step 3

Now that payments and budget have been calculated, you will need to start paying off your smallest debt on Credit Card B. Using the $210 remaining in your budget, you will begin to pay off the debt. With these exact figures, it will take about 4 payment cycles to pay off Credit Card B (800/210 = 3.8).

Step 4

After Credit Card B has been paid off in full, the next step is to move on to the next smallest debt. In this case, it will be Credit Card A. Now that Credit Card B is paid off, both the minimum payment and additional payments funds are available to pay off Credit Card A. The minimum payment for Credit Card B was $20 and the attentional payment was $210. If you continue with your payment cycles, you will now have $230 to apply towards Credit Card A. You will continue the cycle for your car loan and the student loan until you have paid off all your debt.

The snowball method is considered one of the best ways to eliminate your debt because of both its simplicity and ability to gain momentum, similar to a snowball rolling down a hill. You can focus on one bill at a time but quickly move through each balance, eliminating one after the other using the extra money freed up from the previous balances’ elimination.

Reducing your debt is an important part of financial stability and liberty. Without bills looming over your head, you will have the income to invest, save, or use for personal use. This can allow for your wealth to grow and multiply, rather than stay stagnant.


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