How to Use the Debt Snowball Method to Pay Off Debt

The debt snowball method is a debt repayment strategy that focuses on completely paying off your smallest debts first, working your way up to the biggest debt.

• Why snowball? Imagine making a small snowball then rolling it around in the snow. As the snowball rolls and more and more snow sticks to it, it gets bigger and bigger until it becomes a snow boulder.
• How does that relate to debt? With the debt snowball method, you start small—paying off your smallest debt as quickly and aggressively as possible, then moving on to larger and larger debts—aiming to eradicate each debt one at a time.¹ 

By the time you get to larger debts, you have extra cash freed up from no longer having to make payments on the smaller debts. This creates a “snowball” that grows and grows until you’re debt free.² It’s all about building momentum to keep you motivated so you maintain the discipline you need to get out of debt.

Think of it this way: chipping away at a large loan can feel endless, even if you’re paying extra each month. But when you pay extra on a small debt to knock it out as quickly as possible, you see results—fast. And those fast results motivate you to stay on track.

Paying off any debt requires self-discipline. But that’s especially true in the case of the debt snowball method. The idea is to gain momentum and tackle debt as quickly and intensely as possible, even if it means you end up paying more money in the long run due to interest.

Before even trying the debt snowball strategy, experts suggest you get current on all bills and have at least $1,000 saved up as an emergency fund.³ List your debts in order from smallest dollar amount to largest, regardless of interest rate. Then:

1. Start paying off your smallest debt. The goal is to attack it with all your might, making the highest payments you can afford and reducing your lifestyle if necessary to pay it off as quickly as possible (while still making minimum payments on all other debts, of course).
2. Once the smallest debt is paid off, take the amount you were paying on that debt and put it towards paying off the next-largest debt.
3. When that debt is paid off, take that even bigger monthly payment and use it towards the next largest debt.
4. Rinse and repeat until you’re debt free!

It should be clear that the debt snowball method is as much a behavior modification strategy as it is a debt reduction strategy.⁴ The main idea is to be aggressive. You’re trying to build the snowball of all snowballs. The kind of snowball that’ll destroy the strongest snow fort on the block. This might mean picking up a side job, tightening your budget, or even having a yard sale. Every excess dollar goes to your smallest debt first.

But it’s not for everyone: we’re all motivated by different things. If you’d rather pay less interest than celebrate small victories, the debt snowball method might not be for you.

The primary advantage of the debt-snowball method is the positive psychological effect it brings. For many people, achieving small triumphs feels good. The idea is that that good feeling will push you to keep working hard to tackle your debts. Furthermore, several studies show it works. Indebted consumers tend to be more motivated by strategies like the debt snowball method because they tend to boost motivation to pay off debts more aggressively.^5,6

The debt snowball method is often more expensive in the long run because more interest accrues on larger loans over time.⁷ In addition, it won’t work for everyone. Depending on your personality and what motivates you, eliminating debt when faced with the immediate option to spend money can be difficult.⁸

If you don’t have the funds to make extra payments or you’d rather pay the absolute minimum on interest, there are other options, including:

• Debt snowflaking,
• The debt avalanche,
• A custom model—for math lovers only!

If you’re strapped for cash, debt snowflaking involves putting any extra small sums of cash (snowflakes) toward debt repayment. “Snowflakes” could be a tax refund or a $10 bill found in your jacket pocket, for instance.⁹ If you want to save on interest, the debt avalanche method focuses on paying off your highest-interest debts first, regardless of loan size. And finally, if you like math: Research has found that customized mathematical models using mixed integer linear programming might beat both the debt snowball and debt avalanche method in terms of efficacy.¹⁰