How Does the Debt Snowball Method Work? 


What is the Debt Snowball Method?

You may have heard of this term before. The debt snowball method is a personal finance strategy that is used to help individuals become debt-free. It involves creating a plan to pay off the debt in order of smallest to largest balance (regardless of interest rate). It basically helps you tackle one pile of debt at a time and hone your focus on the smallest issue first. 

Here’s how the debt snowball method usually works:

  • Sort all your current debts by balance, starting with the smallest and working your way up.
  • Make the minimum payments on all debts except the smallest.
  • Apply any extra money you have towards the smallest debt until it’s paid off. If you need to, get a second source of income to get some extra cash to tackle the debt. You can take out a title loan if you need to consolidate some of your debt. 
  • Once the smallest debt is paid off, move on to the next smallest debt and repeat the process until all debts are paid in full. That’s the whole method!

The idea behind the debt snowball method is to gain momentum and motivation as you pay off smaller debts. You are more likely to stay on track financially when you are motivated, and paying off smaller debts can help achieve that motivation! Just keep using the debt snowball method to work towards your goal of becoming completely debt-free. Additionally, seeing progress in paying off debt can help build confidence and a sense of accomplishment, which can motivate you to stick to your plan

What is the Debt Avalanche Method?

The debt snowball method has a partner! It’s known in the financial industry as the “debt avalanche method”; as the name suggests, it is more aggressive and stronger than the snowball method. But, the debt avalanche method is just another personal finance strategy for paying off debt and working towards your goal of becoming debt-free. Unlike the debt snowball method, which prioritizes paying off debt with the smallest balance first, the debt avalanche method prioritizes paying off debt with the highest interest rate first. It’s a good method for if you’re wondering how to pay off a car loan faster, or credit cards, depending on which has the higher rate.

So, as you can imagine, the process is similar. Sort your debt by balance again, and instead of prioritizing your smallest payment every month, prioritize your largest payment that has the highest interest rate. While this method may not offer as much positive reinforcement, it can help you save money in the long run by reducing the amount of interest you pay over time. By paying off the debt with the highest interest rate first, you reduce the amount of interest that accumulates, which can save you a significant amount of money over time. That’s got to be good for your wallet!

It is important to choose the strategy that will be the most beneficial for YOU. What works for one individual may not work for another and vice versa. If you know which option works best for you, then go for it!

Budgeting Can Help You Manage Your Debt

Now that you know more about the debt snowball method and how it works, you may be curious about how to manage your budget outside of your debt. How do you spend your money each month? Where are you allocating your income? A budget is a financial tool that helps you manage both your income and expenses. If those are managed correctly, you can prioritize paying off your current debt through the snowball/avalanche method. You can also use a budget to make sure you have enough money to cover your living expenses.


By creating a budget, you can see exactly where your money is going and identify areas where you can cut back on spending to redirect that money toward paying off debt.

Here are some ways budgeting can help with managing debt:

  • Identify Where you are Overspending
  • Help You Find Extra Wiggle Room in Your Budget
  • Find a Debt Management Strategy that Works for You
  • Change Your Spending Habits


Overall, a budget is just a financial tool that you can use to manage your spending habits, finances, and your debt. You can use the debt snowball method to 

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