What Is Snowballing and How Can It Get You Out of Debt

Snowballing, also known as the debt snowball method, is exactly what it sounds like: you start with a fistful of something small and add to it until you have something glistening and bright. And, without question, being debt-free is a beautiful prospect.

With the snowball method, you attack your outstanding accounts one by one, moving from the smallest to the largest.

The other encouraging thing about this battle plan is that, once you commit to it, you’ll quickly feel the momentum. This is a tried-and-true method that works. Here’s how you can achieve financial freedom, too.

Make a List

First, you need to know what you’re dealing with. Take out a pad and pen, or open a new spreadsheet, and detail all your debt, from the smallest account to largest.

Snowballing is strictly about the size of your outstanding balances. It lays interest rates completely to the side.

Sure, that smaller credit card with a $4,000 balance may have a lower interest rate than the one with an $18,000 balance. But, it doesn’t matter.

This method is all about starting with the smallest account and working your way up. Those high interest rates were there before and they’re not going anywhere now.

Reduce Everything to a Minimum Payment

You may have been attempting to make strides on your student loan by paying off a little more than the minimum payment every month. This is the time to stop doing that.

Reduce everything on your list to the minimum monthly payment except, of course, the first debt that you’re snowballing.

Pay as much as you can on your smallest debt. Redirect any additional payments you were making on the other debts to the account you’re focusing on.

Stop buying coffee three times a week. Start bringing your own lunch to work. Only allow yourself two dinner dates per month. Take all those excess funds and bat them towards that first account balance.

Rinse and Repeat

Once you’ve knocked down that first debt, move onto the next and then the next. Use your notebook or spreadsheet to record your progress month over month.

It may feel uncomfortable to leave that high interest rate loan out there in the lurch. But, the snowball method works because it’s a well-defined strategy. It also works in terms of motivation. It does something to our psyche when we start to sense that this is possible.

One of the reasons so many of us walk through life with tremendous debt is because we feel there’s no way of ever getting out from under it. With the snowball method, you’ll start to see there is.

Snowballing Gives You Back the Keys to Your Life

The feeling of relief you will experience when you’ve paid down that first bit of debt is indescribable. A new level of accomplishment will wash over you.

Choose to commit to the debt snowball method and you’ll be astonished at where you are six months from now, nevermind a year. All you have to do is decide to break free today.