The Debt Snowball Method

Debt Repayment for Households Needing to Rebuild their Credit Quickly

The Debt Snowball method is the best known of all debt repayment methods, thanks to radio talk show hosts who adopt its framework and pound its benefits into listeners’ minds day and night. The idea behind this method is that it offers the additional motivation many individuals and households need to persevere through their debt repayment activities. This motivation is said to come from seeing progress sooner than with other methods since the Snowball focuses extra payments on the smallest of all your debts. In reality, the Debt Snowball is just one of many methods you should consider using when seeking to accelerate your debt repayment plan.

Here are the steps to the Debt Snowball method:

  • Write down what your minimum monthly payments are for all your current debts.

  • Do not use your credit cards, store cards or other lines of credit again, at least until they are paid off in full and you are ready to use them wisely.

  • Create of list of all your debts (credit cards, store cards, car loans, home loans, personal loans, student loans, etc.) and order them from the account with the smallest balance at the top to the account with the largest balance at the bottom. This is your debt attack order.

  • Make minimum payments to every account on your list except the account at the top. Add all available cash to the minimum payment of the account at the top of your list.

  • Each time you pay off an account, add the payment previously be sent to that account to the next account at the top of the list. This is known as “rolling over” your payment.

  • Become credit card debt free in just three or four years rather than fifteen to twenty-five years at standard minimum payments. Including your car and mortgage payments in this process could cut your repayment terms in half.

Does the Debt Snowball Really Work, and if so, Who Does It Work Best For?

The debt Snowball repayment method works best for individuals and households who believe that seeing progress in their debt repayment plan as early as possible will keep them the most motivated to complete their plan. The individual or household must also be committed to the method. This plan still demands patience and tenacity to complete. If you choose this plan, your motivation may come early from the possible account elimination you experience in the first few months, but ultimately, it must come from your financial goal of living debt free.


It is interesting to note, however, that studies show no difference in the amount or quality of motivation the debt snowball method provides as opposed to other do-it-yourself debt relief options. Essentially, this means that success is more about what you believe than what you do. If you believe the Debt Snowball is best for you, then it will be best for you. If you believe the Debt Avalanche, Debt Landslide or Debt Cascade methods are best for you, then they are.

Regardless, it may still take two to four years or more to pay off the first account on your list (depending, of course, on your individual circumstances). Consequently, any individual or household embarking on this repayment method will need to possess sufficient patience and discipline to see the plan through to the end. Unfortunately, individuals and couples do not generally get into crushing consumer debt through an over-abundance of self-discipline. Consequently, this required character trait may not be present as often as hoped for.

By using the Debt Snowball method, similar to other methods discussed on this web site, you can get out of debt in a fraction of the time of standard minimum monthly payments while also cutting the amount of interest you pay to just a fifth or less of the standard method.

How do you start a Debt Snowball?

As the name implies, the Debt Snowball generally starts with relatively small the pick up size as the balances cascade downward toward $0.

To maximize this method, find an additional $50 to $200 or more to include with your payment to the debt at the top of your list. If you are unsure of how to come up with this amount of extra payment, look over our PowerCash tool and calculator for help.

To begin, send your extra payment each month to the creditor on top of your list. Once you have paid off your first account, use that account’s former payment and the PowerCash you were sending there to the next debt on your list. Roll over such payments every time you pay off an account.

Be careful not to start spending any freed-up money again on consumer purchases once you pay off an account. Your goal is to experience debt freedom not continual debt.

An Example of the Debt Snowball Method

Here is a comparison of the Debt Snowball method against the standard Minimum Monthly Payment method. This comparison includes two scenarios, one without extra PowerCash and one with $50 in PowerCash. The APRs are similar on the cards to make the demonstration easier to follow:


Number of credit cards: 4

Annual Percentage Rates (Interest) on each card: 16%

Balances on each card: $2,000, $3,000, $4,000 and $5,000 ($14,000 total)

Minimum Payment Calculation: 3% of Balance

Initial Monthly Minimum Payments: $120 for each account ($480 total)

Minimum Monthly Payment Method

Time to Pay Off: 16 years 10 months

Total Interest Paid: $11,887 (an extra 74% of the original balance)

Debt Snowball Method without PowerCash

Time to Pay Off: 3 years 7 months

Total Interest Paid: $4,836

Using the Debt Snowball method over minimum payments means you will be debt free about 16½ years sooner and will have paid 57% less interest ($6,319).

Debt Snowball Method with $50 PowerCash

Time to Pay Off: 3 years 2 months

Total Interest Paid: $4,193

Using the Debt Snowball method with $50 PowerCash over minimum payments means you will be debt free nearly 14 years sooner and will have paid 62% less interest (that is $6,963 you keep in your pocket).

Keys to Debt Snowball Success

Besides committing to and sticking with your Debt Snowball repayment plan, there are additional actions you should take to see your plan through to success. They include the following:

  • Contribute to an emergency savings fund EVERY month, even if it is just a few dollars.

  • Put together a spending plan (aka “budget”) so you know how much you can spend on all aspects of your life.

  • If you get a raise at work, take on another job to earn a second salary, receive a cash gift, or get a tax refund, split the additional income between your emergency savings fund, a retirement plan, and your Debt Snowball repayment plan. You do not need to split the income evenly, but commit to contributing a fair share to each activity.

  • Continue to live below your budget so that you avoid consumer debts in the future.

  • Keep track of your progress. Create a line graph that shows your debt balances on the vertical (left) axis and the month on the horizontal (bottom) axis. After just four or five months, you will see a line forming that will point to your estimated pay off date.

  • Consider throwing yourself a debt freedom party. The month after you become debt free, consider using no more than half the money previously sent to your creditors to celebrate your achievement. It might be a small trip, a refreshed wardrobe, a service you have never paid for before (e.g. home cleaning, car detailing, etc.), or some other treat. Enjoy the feeling of freedom that you have just generated through your hard work and dedication.

Now that you have a grasp on how the Debt Snowball works, determine whether it is the plan for you. Consider the Debt Avalanche, Landslide and Cascade methods as well. Regardless which plan you choose, get started today. The sooner you start, the sooner you can celebrate your debt freedom.

Related Information: How To Get Out Of Debt Quickly