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The debt snowball method focuses on paying off your smallest debt balance first, then moving on to the next smallest — which leads to small victories that add up.
The debt avalanche method takes the opposite approach and focuses on paying off the debts with the highest interest rate first.
With the debt snowball method, pay your smallest debt in full first, then roll the amount that was going toward that bill into paying off your next-biggest one. The amount you're paying on your focus debt keeps growing — much like rolling a snowball down a hill.
Small victories upfront — the satisfaction of seeing debts eliminated one by one — keep you engaged. It’s very different from the debt avalanche strategy, which prioritizes high-interest debt to save money but may take longer to get the first debt wiped out.
How to use the debt snowball method
First, be sure that you’ve budgeted enough to cover the minimum monthly payment for every debt. Now, arrange the debts by balance, from smallest to largest. Disregard the interest rate on each.
Next, figure out how much money beyond minimums you can devote to reducing your debt. Every month, put that extra money toward your smallest debt — even if you are paying more interest on a different one. Once the smallest debt is repaid, take the entire amount you were paying toward it (monthly minimum plus your extra money) and target the next-smallest debt. Keep knocking off debts and then diverting all the freed-up money toward the next debt in line.
Here’s how it could look in real life: If you have a hospital bill for $1,200 that the hospital is allowing you to pay interest-free, and two credit card bills for $5,000 (at 22.9% interest) and $3,000 (at 15.9%), you’d pay the hospital bill first. That’s right — you’d pay the interest-free loan before you paid those that accrue interest.
This may sound counterproductive, because it can save time and money to pay highest-interest debts first, which makes the debt avalanche method a better fit for some folks. But if you need to front-load your payoff journey with early victories in order to stick with it, snowball is for you.
Look for lower interest rates and ways to pay more
If you choose the snowball strategy and your high-interest debts are also the largest, don’t ignore opportunities to find lower rates, especially if your credit score is climbing.
You may be able to transfer a credit card balance to a lower-rate card, or one with a 0% introductory APR.
You could also look into a debt consolidation loan.
While both the snowball and avalanche methods involve money you actively budget to pay down debt, you can supplement either with “debt snowflakes” — small daily savings.
It’s also helpful to look for ways to free up more funds in your budget to speed up your debt snowball efforts. Some things that may help you reach debt payoff faster via the debt snowball method or a different strategy include:
Is the debt snowball method for you?
You might wonder whether you can ever pay off your debt, even with a debt snowball plan to keep you focused. If your unsecured consumer debts — such as credit cards and personal loans — would take more than five years to pay, consider your options for debt relief.
The avalanche method could possibly mean more savings on interest, but it’s not for everyone. That’s why a less efficient debt snowball may be a good choice for many, even if it costs a bit more over time.