The Debt Snowball Method: A Complete Guide

Paying off debt isn’t easy — but you’re already taking the right step by looking for a plan. The debt snowball method is one of the most popular approaches because it gives you quick wins early on, which makes the whole journey feel more manageable.

What Is the Debt Snowball Method?

The debt snowball is a payoff strategy where you focus on your smallest balance first, regardless of interest rates. You make minimum payments on all your debts, then throw every extra dollar at the smallest one until it’s gone.

Once that first debt is paid off, you take the money you were paying on it and add it to the minimum payment on your next smallest debt. That payment gets bigger each time — like a snowball rolling downhill.

How It Works: Step by Step

1. List all your debts from smallest balance to largest
2. Make minimum payments on every debt
3. Put all extra money toward the smallest balance
4. When that debt hits zero, take its entire payment and add it to the next smallest debt
5. Repeat until all debts are paid off

A Real Example

Say you have three debts:

Debt	Balance	APR	Min Payment
Store card	$500	24%	$25
Credit card	$3,200	19%	$80
Car loan	$8,500	6%	$200

With $200 extra per month, here’s what happens:

Month 1-3: You throw $225/month at the store card ($25 min + $200 extra). It’s gone in about 2-3 months.

Month 4+: Now you take that $225 and add it to the credit card’s $80 minimum = $305/month. The credit card is gone in about 11 more months.

Final stretch: Now you’re paying $505/month on the car loan. It melts away fast.

The Psychology Behind It

The snowball method works because of behavioral momentum. Research shows that people who see early progress are more likely to stick with a plan. Crossing that first debt off your list — even if it’s small — creates a powerful sense of accomplishment.

Dave Ramsey popularized this approach, and millions of people have used it successfully. It’s not about the math being perfect — it’s about building a habit you can sustain.

Pros and Cons

Pros:

• Quick early wins boost motivation
• Simple to understand and follow
• Reduces the number of payments faster
• Proven track record with real people

Cons:

• May cost slightly more in total interest than avalanche
• The first win can take weeks if your smallest balance is still sizable
• Not mathematically optimal

When Snowball Is the Right Choice

The snowball method is usually the best fit if:

• You have several small debts you can knock out quickly
• You need motivation wins to stay committed
• Your interest rates are relatively similar across debts
• You’ve tried paying off debt before and lost momentum

When to Consider Something Else

If you have one debt with a dramatically higher interest rate (say, 24% vs. 6% on everything else), the avalanche method will save you meaningfully more money. The tradeoff is that you might wait longer for your first payoff milestone.

Try It With Real Numbers

The best way to see how the snowball method works for you is to run the numbers with our calculator. Enter your debts, add your extra monthly payment, and see your exact debt-free date.

Every payment is progress. You’ve got this.