Debt Snowball Method
Pay off debts from the smallest balance to the largest—regardless of interest rate—so you get quick wins that keep you motivated.
The debt snowball, made famous by Dave Ramsey, bets on human psychology over pure math. You line up your debts from smallest balance to largest, make minimum payments on everything, and pour every extra dollar into the smallest one. Once it's gone, you roll that entire payment into the next smallest.
The name fits: as you knock out each small debt, the payment you were making on it gets added to the next target. Your monthly debt payment grows—snowballs—and the bigger debts start falling faster than you'd expect.
Strictly speaking, the debt avalanche (highest interest rate first) saves more in total interest. The snowball might cost you a bit extra, but studies show it has higher completion rates. Why? Because wiping out a $500 medical bill in a month feels amazing, and that momentum keeps you going when the $15,000 car loan feels daunting.
The snowball shines when you've got several debts of different sizes and you need those early victories to stay committed. There's real power in crossing a debt off the list and seeing your number of obligations shrink.
Some advisors suggest a hybrid: use the snowball for most debts, but if one debt has a sky-high rate—say 29%—tackle that one first no matter what. Ultimately, the best payoff strategy is the one you'll actually stick with.
Frequently Asked Questions
▸Is the debt snowball or debt avalanche better?
The avalanche saves more on interest; the snowball gives you faster psychological wins. Research shows the snowball has higher completion rates because staying motivated matters more than perfect optimization. Pick whichever one you'll actually stick with.
▸Should I include my mortgage in the debt snowball?
Most advisors say no—focus on consumer debts first (credit cards, car loans, student loans, medical bills). Once those are gone, you can tackle extra mortgage payments as a separate goal.
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