The debt snowball method is a
debt-reduction strategy where you
pay off debt in order of smallest to largest, gaining momentum as you knock out each remaining balance. When the smallest debt is paid in full, you roll the minimum payment you were making on that debt into the next-smallest debt payment.
Here’s how it works:
Step 1: List your debts from smallest to largest regardless of interest rate.
Step 2: Make minimum payments on all your debts except the smallest.
Step 3: Pay as much as possible on your smallest debt.
Step 4: Repeat until each debt is paid in full.
Now, before you start arguing about the interest rates, hear us out. If your largest debt has the largest interest rate, it’s going to be a
long time before you start to see a dent in that crazy balance of yours. But when you stick to the plan (without worrying about interest rates), you’re going to be jumping up and down when you pay off that smallest debt super quick.
That excitement is what’s going to motivate you to keep working hard—all the way to that debt-free finish line.