If you’re looking to get out of debt faster, one of the best ways to do so is with the debt snowball method.
The debt snowball allows you to feel like you’re making steady progress on your debt pay-off journey. (Which can at-times feel like is taking foreeevverrrr.) It can also keep you very organized.
Here’s how to use the debt snowball method. (See the bottom of this post for two free debt snowball worksheets.)
What is the Debt Snowball?
A debt snowball is a method of paying off your debts. To use a debt snowball you list out all of your debts from smallest balance to largest balance. (No need to include your mortgage.)
You then begin throwing as much money as possible toward your smallest debt while still making minimum payments on everything else.
The thought behind the debt snowball method is that you’ll quickly achieve small wins by paying off balances and will be more motivated to continue paying down your debt.
Example of How to Use the Debt Snowball
If I had four debts – one outstanding medical bill, 2 credit cards, and a car loan – I would list them from smallest balance to largest balance. Like this:
- Medical Debt $175
- Credit Card #1 $338
- Credit Card #2 $2,745
- Car Loan $12,852
I would pay the minimum payments on my credit cards and car loans. I would then take every extra dollar I had and apply it to the medical debt. Once the medical bill was paid off, I would pay the minimum amounts on credit card # 2 and my car loan and I would throw everything I had at credit card #1 until it was paid off.
Rinse and repeat.
Are there any cons to using the Debt Snowball Method?
The biggest con to using the debt snowball method is that you may end up paying extra money in interest since you’re concentrating on the smallest debt instead of the one with the highest interest rate.
I personally prefer the debt snowball method because it truly can keep you motivated. All of those small wins can be HUGE for your mindset.
Free Debt Snowball Worksheet
If you want worksheets to help keep you organized I’ve created two that you can download.
On the first worksheet you’ll list out all of your debts from smallest balance to largest balance.
On the second worksheet you can track your individual progress for each debt.
Enter your email in the form above. Once your confirm your email address you’ll be sent a link that will allow you to download both free debt snowball worksheets.
The Debt Snowball Can Help You Pay of Your Debt Faster
If you’re looking to pay off your debt faster the snowball method can definitely help with that!
Are you using the debt snowball method to pay off your debt? I would love to know if it helps keep you motivated.