The Success Behind Debt Snowballing: A Guide to Debt Repayment

If you tried budgeting, cutting expenses, and balance transfers but your debt still feels like a lead weight dragging you under, the debt snowball method is a simple method to build momentum and finally pay off your debt.


What Is the Debt Snowball Method?

This debt-reduction strategy involves paying off your smallest outstanding loan balance before anything else. After paying that loan in full, you reallocate the payment amount from that loan toward your next-smallest outstanding balance. This process continues sequentially until you settle all loan accounts. As payments from each successive paid loan are rolled into the next-highest balance, the total payment amount “snowballs” into progressively larger sums over time. It speeds up the reduction of remaining balances.

This approach works because quick wins keep you motivated. Psychologically, it feels good to close out accounts, so you get a rush of accomplishment that spurs you on to the next victory.


How to Use the Debt Snowball to Pay Off Debt

The road is long, but taking it one step and one debt at a time will get you there.


1. List Your Debts from Smallest to Largest

Make a list of all the debts you owe, including credit cards, student loans, auto loans, and mortgages. For each debt, note the balance owed and the minimum payment. Then, organize the list from the smallest balance to the largest. Paying off debts with lower balances first provides quick wins and the motivation to keep going to become debt-free.

For example:

  • Credit card 1: $500 balance, $25 minimum
  • Credit card 2: $2,500 balance, $75 minimum
  • Student loan: $10,000 balance, $200 minimum
  • Mortgage: $200,000 balance, $1,500 minimum


2. Pay Minimums on All Debts Except the Smallest

Once you’ve made a list of your debts, the next step is to pay the minimum on all of them except the smallest balance. Going back to our sample list above, start by tackling the credit card with the $500 balance. Focus all your extra money on eliminating that first small debt. Once you pay it off in full, take the money you were allocating toward it each month and add it to the minimum payment of the next smallest debt.

This approach builds momentum and inspires you to be 100% debt-free over time through small wins and progress. Continue paying at least the minimum on all other debts while you focus on eliminating each small debt, one by one.


3. Roll Freed Up Money From Paid Off Debts Into the Next Debt

Once you’ve paid off your smallest debt, roll the amount you were paying on that bill onto your next smallest debt. For example, let’s say you pay off a $250 medical bill. Add that $250 to your payments on your next smallest debt, like a $500 credit card bill. Now, you can pay $750 monthly on that card and eliminate it within the next few months.

When that’s paid off, take the $700 you were paying on the card and add it to your payments on the next debt in line. Keep rolling your freed-up money into the next debt until you’ve repaid your consumer debts.

This method works because you pay off debts from smallest to largest, regardless of interest rate. While not always the most mathematically optimal approach, the psychological advantage of quick progress and building momentum can help you stay committed to your debt-free goals. Prioritizing small debts gives you the mental and financial space to tackle more significant debts.


Pros and Cons of the Debt Snowball Method

Like other financial strategies, the debt snowball method has advantages and disadvantages.


  • Motivation: Clearing a list of debts becomes more achievable when you eliminate smaller balances first. If your repayment plan begins with tackling larger, high-interest debts, it might lead to frustration and the risk of quitting the plan.
  • Implementation: The debt snowball method is easy to implement. Unlike strategies that involve comparing annual percentage rates (APRs) for different debts, it only requires knowledge of each debt’s balance for prioritization.



  • Interest: The debt snowball method may not be the most cost-effective in terms of interest savings. Prioritizing balances over interest rates and making only minimum payments on lower-priority debts can result in a higher overall interest cost.
  • Time: Due to its emphasis on addressing debts based on balances, the debt snowball method may extend the time required to pay off the total debt. This approach might allow larger, high-interest debts to grow, potentially delaying the overall debt repayment process.

Sometimes, we have no choice but to use the debt snowball method due to financial constraints. Despite it not being the most cost-effective in terms of saving on interest, its success lies in the psychological benefits. Focusing on paying off smaller debts first provides a sense of accomplishment, becoming a strong motivator that helps individuals stay committed to the debt repayment process.

As the old saying goes, “How do you eat an elephant? One bite at a time.” Focus on the small wins, celebrate paying off each debt, and keep up the momentum. Before you know it, those little debts will have snowballed into paying off every debt you have.

Related: 9 Effective Ways to Get Out of Debt Within a Year


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