How To Use The Debt Snowball Method To Pay Off Debt


Nearly all Americans have some form of debt. And millions of Americans feel trapped by the amount of debt that they currently have. If this sounds like you, you likely know first-hand how unpleasant and stressful that can be.

But for so many, getting out of debt seems impossible. When debt starts to look like an insurmountable problem, the debt snowball method might be the strategy that empowers you to tackle that mountain of debt.

Many people once suffocated by their debt have found financial freedom by using the debt snowball method. The name comes from how one goes about building a snowman. First you create a tiny snowball and roll it across the yard so that the momentum and speed turn that tiny ball into a boulder of snow large enough to build a snowman. The backbone of the debt snowball is momentum! It ignores interest rates and instead uses your psychological state to push you forward.

The Four Steps of the Debt Snowball Method

·         Step One

Use an Excel spreadsheet, piece of paper, or budgeting app to list all of your debts–except your mortgage. This includes all your credit cards, student loans, tax debt, auto title loans and medical debts. Put them in order of smallest to largest–regardless of the interest rate!

·         Step Two

After determining which debt is the smallest, make only the minimum payment every month for each of your debts except for the smallest. The smallest debt is the one you tackle head on!

·         Step Three

Pay as much money as you can on your smallest debt each and every month. If you find you have extra money at the end of the month, then use that money to pay off that particular debt. Cut down on unnecessary expenses to increase the amount of money you can put towards that smallest debt. Keep doing this until the first debt is paid off completely!

·         Step Four

After you’ve defeated that first debt, roll those payments on over to the next smallest debt and start throwing all your extra money at that one. Having one less minimum payment will enable you to pay extra every month. Additionally, the feeling of accomplishment will likely fuel your motivation to reallocate even more funds to your debt snowball! Repeat this process until each debt is paid in full, going up and up in size.

The key of the debt snowball method is behavior modification and the driving force behind it is hope. Yes, you can make it out of debt! Once you have paid off the first debt, then the second debt and so on and so forth until it’s all gone.

This does not mean the debt snowball method is an easy process, nor does it mean there won’t be lifestyle changes and sacrifices to make. But once you have made your way out of debt, you will be able to breathe easier and have a level of financial freedom that you never deemed possible.

If you’re looking for more resources on paying off your debts, consider reading these great websites

Punch Debt In The Face

Blogging Away Debt

Frugal Debt Free Life

My Debt Epiphany

Image source: Mike Lawrence.

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