Debt Snowball Method: A Step-by-Step Guide to Paying Off Debt Fast

Debt can feel overwhelming, especially when you’re juggling multiple loans or credit card balances. But there’s a simple and psychologically effective strategy to pay off your debts faster: the debt snowball method. Popularised by financial expert Dave Ramsey, this method helps you build momentum and confidence by paying off your smallest debts first — regardless of interest rates — and rolling those payments into larger debts over time.

In this article, we’ll break down exactly how the debt snowball method works, who it’s best for, and how you can get started today.

What Is the Debt Snowball Method?

The debt snowball method is a debt repayment strategy where you:

1. List all your debts from smallest to largest balance
2. Continue making minimum payments on all your debts
3. Focus any extra funds on the smallest debt first
4. Once the smallest debt is paid off, roll that payment into the next smallest debt

This creates a “snowball” effect, where your payment power grows as each debt is eliminated, helping you build motivation and momentum along the way.

If you’re unsure how to begin budgeting to find extra cash, check out:  How to Create a Budget That Actually Works

Step-by-Step Plan for Paying Off Debt with the Snowball Method

The Debt Snowball Method is a simple yet powerful strategy to eliminate debt. It focuses on building momentum by paying off your smallest debts first, creating a motivational boost that helps you stay committed until you’re debt-free. Here’s a detailed breakdown of how it works:

Step 1: List All Your Debts

Start by writing down every debt you owe. Include:

• Total balance
• Minimum monthly payment
• Due date
• Lender name (optional, for clarity)

This could include credit cards, personal loans, medical bills, or student loans. Use a spreadsheet, notebook, or budgeting app—YNAB App or Monarch Money to organise and track your debts effortlessly.

Step 2: Order Debts from Smallest to Largest Balance

Ignore the interest rate for now (that’s used in the Debt Avalanche Method, not this one). Arrange your debts in ascending order based solely on the balance amount, from the smallest to the largest.

This way, your first win will come faster—and that psychological boost is key to long-term success.

Step 3: Make Minimum Payments on All Debts

Continue to pay at least the minimum payment on all your debts every month. This prevents late fees, protects your credit score, and keeps accounts in good standing.

Step 4: Focus All Extra Money on the Smallest Debt

Now take any extra cash—whether from savings, side income, or cutting back on expenses—and apply it to the smallest debt on your list.

Consider using tools like Rakuten or Honey to save on everyday spending and redirect those savings toward debt.

This helps you pay off that balance faster than expected, and seeing that “paid in full” status gives you the motivation to keep going.

Looking for ideas to save more?

🔗 10 Habits That Can Save You $5,000 This Year

Step 5: Snowball Your Payments to the Next Debt

Once the smallest debt is paid off, take the entire amount you were putting toward it (minimum payment + extra) and apply it to the next smallest debt on your list.

This is the “snowball” effect—your available payment amount grows larger with each debt that’s paid off.

Step 6: Repeat the Process Until All Debts Are Cleared

Keep the momentum going. Every time you eliminate a debt, your snowball gets bigger. Eventually, you’ll find yourself knocking out your larger debts more quickly than you thought possible.

Bonus Tip: Track Your Progress Visually

Use a chart, app, or printable worksheet to track each debt as you pay it off. Checking off those milestones will fuel your motivation.

Why the Debt Snowball Method Works

• Quick wins help you stay emotionally committed.
• Simplicity makes it easier to manage.
• Momentum builds confidence with every payoff.

While it may not save the most money on interest, the Debt Snowball method works wonders for people who need structure, motivation, and a sense of progress.

Debt Snowball Example

Let’s say you have the following debts:

• Credit Card: $500
• Personal Loan: $1,500
• Car Loan: $7,000

You pay off Credit Card A first. Then take its payment (say $50/month) and add it to your personal loan payment. Once that’s gone, combine both payments toward your car loan. This snowball grows with every payoff.

Debt Snowball vs. Debt Avalanche: Which Strategy Is Right for You?

• Choose Debt Snowball if you need motivation and quick wins to stay on track.
• Choose Debt Avalanche if your goal is minimising interest and paying debt off faster mathematically.

💸 Debt Payoff Calculator

Visualize how quickly you can pay off your debts using your monthly budget and interest rate.

Debt Balance ($) Annual Interest Rate (%) Monthly Payment ($) Calculate

Who Should Use the Debt Snowball Method?

This strategy is ideal for:

• People who need emotional wins to stay motivated
• Budgeting beginners
• Anyone struggling to stick to a traditional repayment plan

If you’ve tried to pay off debt before and lost momentum, the debt snowball method could be the breakthrough you need.

Also consider: How to Build an Emergency Fund (Even on a Low Income)

Tips to Maximise Your Success

• Create a realistic monthly budget
• Use a Budget Calculator to find extra cash
• Cut unnecessary expenses
• Use windfalls (bonuses, tax refunds) to accelerate your snowball

Final Thoughts: Start Small, Dream Big

The debt snowball method is proof that **small wins lead to big victories**. By paying off your smallest debts first, you create a cycle of motivation that can propel you to full financial freedom. Whether you’re tackling student loans, credit cards, or personal debt — this strategy gives you a clear, actionable path forward.

Take the first step today. Start your debt-free journey with the snowball method — and let your success build momentum.