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Using the ‘Snowball Method’ To Pay Off Debt

Using the 'Snowball Method' To Pay Off Debt | Brown & Joseph, LLC


Feeling like you’re stuck under a pile of bad debt?

Consider using the ‘snowball method’ to get out of debt fast, while minimizing the interest you pay over time.

The snowball method was popularized by finance guru, businessman and author Dave Ramsey.

How the snowball method works

First, organize all your debts by balance size.

Pay the minimum amount owed towards all your debts, then put any extra money towards paying off the smallest debt first.

Once the smallest debt is paid off, roll that money over towards paying off the next largest debt.

This method is designed to psychologically encourage you to pay off more debts by giving you “small wins” for motivation.

Here’s an example from Dave Ramsey’s website:

Say you have the following four debts:

  1. $500 medical bill ($50 payment)
  2. $2,500 credit card debt ($63 payment)
  3. $7,000 car loan ($135 payment)
  4. $10,000 student loan ($96 payment)

Using the debt snowball method, you would make the minimum payments on everything except the medical bill. For this example, let’s say you have an extra $500 each month from taking a side job and cutting your expenses down to the bare minimum. 

Since you’re paying $550 a month on the medical bill (the $50 payment plus the extra $500), that debt will be done in one month. You would then take that $550 and attack the credit card debt. You can pay $613 on the plastic (the freed-up $550 plus the $63 minimum payment). In about four months, you’ll wave goodbye to the credit card. You’ve paid it off!

Now punch that car loan in the face to the tune of $748 a month. In 10 months, it’ll drive off into the sunset. Now you’re on fire!

By the time you reach the student loan—which is your biggest debt—you can put $844 a month toward it. That means it will only last about 12 months.

Click here to download a free, printable Debt Snowball Worksheet!


While the snowball method is great for managing multiple debts while still having some financial freedom, people with more financial discipline might consider using the ‘avalanche method‘ instead.

Whatever method you decide to use, paying off your debt is guaranteed to leave you with more peace of mind and money to spend on what you want.

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