Debt Snowball Method: A Step-by-Step Guide to Paying Off Debt

The average American has about $108,137 in total debt, according to recent Joint Economic Committee data. Dealing with debt — whether it’s student loans, auto loans, credit cards, or personal loans — can be stressful, but debt repayment strategies (like the debt snowball method) can help.

With this repayment strategy, you can whittle away your debts and get your finances back on track. Learn more about how the debt snowball method works, how to stick with it, and whether it’s the best debt repayment strategy for you.

What is the debt snowball method?

The debt snowball method is a popular debt repayment strategy. It can help you eliminate debt by focusing on small balances first and building momentum as you work toward paying off higher amounts.

The goal of this strategy is to get rid of the smallest debt as quickly as possible. Once you’ve done that, you move on to the next smallest — and then the next — until you’ve paid off everything you owe.

“The snowball method tends to work well for people who are trying to get motivated,” says Ashley Morgan, a debt and bankruptcy lawyer with Ashley F. Morgan Law PC in Northern Virginia. “Since you’re paying off the smallest balances first, you will see more [progress]. It can be motivating to see small debts paid off quickly.”

How does the debt snowball method work?

The primary goal of any debt reduction method is to help you get more control over your debts. The debt snowball method can also keep you motivated as you experience small victories with each repaid debt. Here’s how this strategy works.

Listing your debts from smallest to largest

Start by writing down all your debts, from the smallest balance to the largest. Don’t worry about interest rates. The debt snowball method prioritizes debts by balance.

Once you’ve organized all your debts on paper, you’ll have a clearer idea of what you owe and to whom. Say Sarah owes $15,000 in total debts across several types of loans and credit cards. Here’s how she would organize those debts using the debt snowball method:

• Credit card A ($1,500)
• Credit card B ($3,000)
• Personal loan ($4,000)
• Student loan ($6,500)

Ignoring interest rates, Sarah can now start tackling her debts in order from smallest to largest.

Making minimum payments on all debts except the smallest

The goal is to focus on paying off the smallest balance first, but it’s still essential to keep up with monthly minimum payments. Otherwise, you could fall behind on payments and end up with late fees. Left unchecked, missed payments can damage your credit.

Make minimum payments on all debts except the one you’re currently tackling. Once you’ve paid off the current smallest balance, you can prioritize the next one.

Focusing extra payments on the smallest debt

Since you’re only making minimum payments on your other debts, you might find you have extra room in your budget. Put any extra cash toward your smallest debt to pay it off sooner.

“Use whatever you save to pay down the next debt,” says Howard Dvorkin, CPA, debt counselor and chairman at Debt.com. “Whatever you do, don't spend that savings on anything that isn't crucial to your life. Otherwise, the whole exercise becomes meaningless.”

Consider making a household budget to see if you can curb spending anywhere and increase those debt payments. This can help you pay off your debts even faster.

Repeating the process as each debt is paid off

Once the smallest debt is fully paid, move on to the next smallest balance. As you go, you’ll ideally have even more cash (the minimum amount plus any extra) for the remaining debts. Like a snowball rolling down a hill, you can use that momentum to tackle those other debts until they’re gone.

For example, say Sarah has just paid off credit card A ($1,500) by making $300 monthly payments. She can now put that extra $300 (plus the minimum amount she was already paying) toward credit card B ($3,000).

Repeating this process as each debt is paid off will eventually get you out of debt — as long as you don’t take on any new debts along the way.

Pros and cons of the debt snowball method

As far as paying off debt goes, the debt snowball method can be an effective strategy, but it’s not without its drawbacks. These are the main advantages and disadvantages of this debt reduction method:

Whether the debt snowball method is best for you depends on the type and amount of debt you have. “If a lot of your debt[s] are larger, like student loans, one high balance credit card, etc., it can be discouraging when you don’t see progress happen,” Morgan says. “But when you have multiple accounts, especially some smaller ones, like $1,000 or less, it can be very encouraging to see those paid off.”

Debt snowball method vs. debt avalanche method

Both the debt snowball method and debt avalanche method are designed to help you become debt-free, but each works differently.

Key differences

The debt snowball method focuses on paying the smallest debt off first, regardless of interest rate. Once that debt is gone, move on to the next smallest and so on.

The debt avalanche method focuses on paying the highest interest rate first. Once you’ve paid that off, move on to the next-highest interest rate. Repeat the process until all debts are gone.

With both methods, you still make minimum payments on your other debts. You also put any extra funds toward the debt you’re currently tackling.

Which method is right for you?

The best debt repayment strategy depends on your finances and goals:

• The snowball method may be better if you need quick wins to stay motivated.
• The avalanche method makes sense if you’re disciplined and want to save money in interest.

“Paying off the highest interest rate first will save you time and money,” Dvorkin says. “Of course, using the snowball method and paying off the smallest debt first can give you a big psychological boost. So, if you're the kind of person who's impatient and needs to see progress or you get discouraged, then the snowball method is better than nothing. But if you can keep your eye on the prize, go avalanche all the way.”

Tips for successfully implementing the debt snowball method

Paying off debt can take time and discipline. Here are some quick tips to make sure the debt snowball method works as intended.

Creating a realistic budget

When dealing with debt, the first step is to create a budget you can realistically follow.

“Most people do not necessarily know where their money goes each month,” Morgan says. “Starting with a budget and seeing where your money goes helps a lot.”

Write down all expenses and income sources so you know what’s coming in and what’s going out. Tracking your spending — like groceries, entertainment, and utilities — can also help you keep track of your finances.

Finding extra income to accelerate debt payoff

Once you have a working budget, look for ways to cut down on spending. For example, do you have an unused monthly subscription service you can cancel for some extra cash? Are you spending too much on dining out each week? Trimming your current spending habits can help you get out of debt sooner.

You may also want to find ways to increase your income. For example, you could start a side hustle, sell items you no longer need, or ask for a raise. 

Staying committed to your debt repayment plan

Any debt reduction method can take time to successfully implement. Whether you’ve decided on the debt snowball method, debt avalanche method, or something else, try to stick with it. You’ll start to see noticeable progress as you go.

Plus, you can always switch strategies later.

“Early in my career, I had a client who was so beaten down by her debt, she needed some confidence. So, we used the debt snowball method — but just for a little while,” Dvorkin says. “Once she paid off three retail credit cards with low balances, she felt emboldened to go avalanche on the rest. She saved a lot more by making the switch. The lesson here: You're not locked into one of these methods. You can toggle between them.”