The Debt Snowball and Why It Works

The Debt Snowball and Why It Works

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Are you tired of debt? Ready to be done with the stress and difficulty of always sending money away for minimum payments? 

I have been there, ready to get rid of debt, and many others have been in the same position you are in.

However, it always seems to be the most difficult place to be because you’re ready to go, ready to pay off that debt, but where in the world do you start?

How do you do about it?

Well, the debt snowball is absolutely a method you should consider. I know that it works from personal experience, and I have helped others navigate their debt pay off as well, so I know that it will work for you if you dedicate the effort it requires.

What is the Debt Snowball?

The debt snowball is a process of going about paying of multiple debts. This debt snowball approach would not apply to someone that has no debt, or only have one single debt and nothing else.

The debt snowball is all about momentum and motivation.

The method is to list the debts in order from smallest to largest and pay them off in that order. The main thing here that is usually most difficult to grasp for many people is that we would be ignoring the interest rates and simply focus on the balance when using the debt snowball approach.

There are many ways to pay off debt. One is to keep paying minimum payments for an incredibly long time. Then there are others that take a more serious approach about ridding ourselves of debt.

The two of the most common that I see are the Debt Snowball and the Debt Avalanche.

The Debt Snowball vs. The Debt Avalanche

As mentioned, the debt snowball is paying off your debt in order from smallest balance to largest balance.

The Debt Avalanche, however, is paying off your debt in order from the largest interest rate to the smallest interest rate. The reason I don’t find this method as beneficial is not that it doesn’t work, it absolutely does. It is just the fact that starting with interest rate could mean a higher balance debt that we are attempting to get rid of. If the balance is high, then it is going to take a longer time to pay it off, compared to getting to the smallest balance first and knocking it out right away and having that sense of accomplishment!

Why I Personally Like the Debt Snowball 

The cool thing about the debt snowball is that it allows for momentum, motivation, small wins and building up to the long hauls.


The debt snowball helps you gain momentum because you are starting small but continually gaining more and more traction as you pay off more loans. You may be starting with the smallest balance, but when you pay that smallest balance and move on to the next one on your list, there is a sense of momentum because you are “rolling down the debt hill” and gaining more and more speed (or in this case, snow).


In addition, it also allows motivation to build because of a similar reason. As you continue through your list and you start seeing your debts crossed out because you paid them off completely… how great would that feel? Being able to see the progress and visually mark how far you have come is great motivation as you continue forward on your debt payoff journey.

Small Wins

Even more so, the debt snowball helps create small wins at first. When you have a lot of different debts, you are going to be starting with some smaller amounts instead of having all huge balances to start with. With this being the case, seeing yourself pay off a $200 credit card is a small win, that pays big results. Knowing that you have what it takes to get ahead is going to help you move forward.

Additionally, with each debt that you pay off, you are freeing up a minimum payment. This then allows you to take that minimum payment that you used to pay on the other debt and now add it to a different debt, increasing your payment and getting you out of debt quicker! I will show you an example a little later on in this blog post.

Building Up to Long Hauls

Lastly, I like the debt snowball because it helps build up to the longer hauls. What I mean by this is that at first, paying off a $500 credit card isn’t going to
take that long. Paying off a $15,000 credit card, however, is going to take a bit
longer, and when you try to do a large balance when you are starting out, it can be difficult and a bit disheartening to not see much progress for so long.

When you use the debt snowball method, you get to build up your motivation
and momentum as you pay off the small debts while working your way to the
larger debts.

If you started with the biggest debt because it had the biggest interest rate and it took 2 years, you may never get through it.

Don’t underestimate even the smallest of things like taking 6 months to pay off 7 different debts, then starting on the bigger accounts even though they are
going to take a lot longer

When you’re in the midst of those longer hauls of paying off debt, you can look back at your list and see how it was worth it to stay focused and pay off the debt.

The Debt Snowball and Why It Works

How to Start

List All Your Debts

With the debt snowball, it is an absolute must to list out every single debt you have.

It can sometimes be difficult to find all those numbers and companies that you have debt with, but it is absolutely crucial.

Pull Your Credit Report

You may need to pull your credit report, but you get one free each year from each of the three companies so don’t worry about that!

Do 2 Pages of Homework

When I am working with my coaching clients I often have them
do some homework. I know, homework?! That homework is to take two blank pieces of paper and put them in front of them.

I tell them to take one of the pages and use it to list every single debt out. It doesn’t matter the order, the interest rate, the name, nothing, just write every little thing down. The point here is to not pay attention to how your debt list looks, it is to just make sure you get everything in front of you.

Once everything is written down on the first page, then on the second page, take what you wrote out on page one and organize it. You can make it pretty if you want, but list all the debts in order from smallest to largest.

This page has now become your debt snowball list.

If you do this, you will have accomplished 3 major things by doing this simple exercise.

1.    You now know exactly how much you owe. This is so important
with the debt snowball. Sometimes it is difficult to come to this realization of what exactly is going on, but it is crucial to your debt free journey. Accepting the current situation is the only way to move forward. Let me encourage you with this, don’t focus so much on how you got here, focus more on where you’re going.

2.    You have everything written in one place. This is helpful because often times life can get crazy, busy or whatever it is and things slip our mind. After putting some work into ensuring everything is written down, you can now refer to this paper if you ever have a question about
something, or if anything comes up.

3.    You now have your plan of attack. You can use this list to start paying off the smallest debt and working your way down the page. I would even recommend putting this paper somewhere that you will see it often, it will keep you motivated to continue working hard to pay things off. Make sure to make it really clear when you pay off a debt, use a huge sharpie and put a nice big line through the debt! Make it so apparent that you paid it off… this will keep you motivated to continue forward as well because you’ll see it and always remember how far you have come!


Remember This

When you first start doing a budget and are intentional about paying off your debts you might find it difficult to scrape extra money together to start making bigger payments on your debts.

This is normal.

You have a couple options to help with this.

Cut Back Your Expenses

Option one would be to start cutting back all unnecessary expenses. What exactly are unnecessary? We all have our own opinions on what should be absolutely included and what should not, but ultimately you will have to define those for yourself. If you are really unsure, make sure that you always protect these things as absolutely necessary expenses – food, shelter, clothing, and transportation.

Increase Your Income

Option two is to get more money coming in by picking up a side job. There are so many options now that you can just “turn on” something and start working.

For instance, you can deliver food to people with Doordash.

There are a lot of possibilities and maybe when you need some extra cash and the budget is completely cut and you’re still in a bind, a side hustle is going to be your go to. Check out my page with ideas for how to Make More Money. If you’re a reader, you could also pick up this book on side hustles that I personally enjoyed.

I had multiple side hustles while I was saving aggressively for an engagement ring for my now wife, and our wedding. I actually had a lot of fun doing them… so much so that I still involve myself in a consistent side hustle!


An Example of the Debt Snowball

Here is a simple example of the debt snowball. 


A couple has 7 debts that are as follows:  

Name Balance Minimum Payment
Credit Card $1,200 $100
Credit Card $4,000 $150
Credit Card $450 $45
Credit Card $10,000 $600
Bank Loan $900 $100
Student Loan $24,000 $340
Car Loan $12,000 $380

If we take their list and order it by smallest balance to largest balance, as we would for the debt snowball, it would look like this: 

Name Balance Minimum Payment
Credit Card $450 $45
Bank Loan $900 $100
Credit Card $1,200 $100
Credit Card $4,000 $150
Credit Card $10,000 $600
Car Loan $12,000 $380
Student Loan $24,000 $340

Once they start paying off their debts and using the minimum payments from the previous loans to apply to the next one, it would look like this: 

Name Balance Minimum Payment New Payment
Credit Card $450 $45 $0
Bank Loan $900 $100 $145
Credit Card $1,200 $100 $100
Credit Card $4,000 $150 $150
Credit Card $10,000 $600 $600
Car Loan $12,000 $380 $380
Student Loan $24,000 $340 $340

As they continued paying off debt, the snowball would really start to roll and gain momentum as you can see here – 

Name Balance Minimum Payment New Payment
Credit Card $450 $45 $0
Bank Loan $900 $100 $0
Credit Card $1,200 $100 $245
Credit Card $4,000 $150 $150
Credit Card $10,000 $600 $600
Car Loan $12,000 $380 $380
Student Loan $24,000 $340 $340

You can see from this example the power of the debt snowball and how it allows for small wins at first, continual motivation to keep going, and great momentum.


Know Your “Why” 

If you need to focus most of your attention anywhere, it is here.

Knowing your “why”, is of the utmost importance.

Why do you want to get out of debt?

For what reason do you want the debt snowball to work?

What is the purpose that you’ll be putting in all of this hard work?

If you do not have a clear why it is going to be much easier for you to give up along the way because here is the truth, things happen.

You Will Face Discouragement

There are going to be months that are super encouraging, but just the same, there will be months super discouraging. You’ll have less extra to pay on your debts some months because something came up, you’ll have moments of failure, these things happen, but your “why” can keep you on track.


A Few Examples of a Clear “Why”:

“I want to do this for my children to give them an incredible future.”

“My why is so that I can save up for a house and travel.”

“I desire freedom from debt so that I can retire.”

“I will continue forward so that I can be at peace with my situation and not have to worry about what I owe.”

Whatever your “why” is, make sure it is exactly the reason that you are working to get out of debt.

Make It Visual

Try making your “why” visual. Can you put up a picture of your why?

Maybe it is a picture of your future home, or of your future vacation location, or your children… whatever it is, try making it visual and posting it up somewhere that you will see each and every day. Put it right next to that list of debt you have, that way when you see one, you’ll see the other one.

Seeing this every day next to your debt list can be powerful, powerful enough to keep you on track, to remind you of why you are making certain decisions the way that you are and this can be extremely rewarding as you continue on your debt snowball journey.

Don’t Give Up!

If you will put in the effort to stick with the debt snowball, you will make it. You will get out of debt. You will no longer owe anyone, anything! All of the money that comes into your account won’t have to be paid to the car loan, the credit cards or the student loans, you’ll be DEBT FREE!

You can do it.

There’s only one way to make it work. By not giving up. If you’re ever tempted to give up, send me an email. I’ll encourage you to keep going. Why? Well, I know you can do it. I know that you can get out of debt because you have the tenacity to start the process.

Don’t give up.





Here’s my question for you, what is your “why” for paying off your debt? Let me know in the comment section!



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