How to Get Out of Debt Using the Snowball Method: A Step-by-Step Guide
- Nathan JC Webber
- Apr 18
- 5 min read
Debt can feel overwhelming, suffocating even. Whether it's credit cards, student loans, or medical bills, watching your balances grow can lead to anxiety, sleepless nights, and a sense of hopelessness. But there’s a proven strategy that can help you regain control and build lasting momentum: the Snowball Method.
This guide will walk you through everything you need to know about the Snowball Method—what it is, how it works, and how you can start using it today to crush your debt and achieve financial freedom.
What Is the Snowball Method?
The Snowball Method is a debt repayment strategy popularized by personal finance expert Dave Ramsey. The approach focuses on paying off debts from smallest to largest, regardless of interest rates. While that might seem counterintuitive from a purely mathematical perspective, the emotional wins of eliminating smaller debts first help build confidence and motivation.
Why It’s Called “Snowball”
Think of rolling a snowball down a hill. It starts small, but as it moves, it gains mass and momentum. Similarly, when you pay off smaller debts quickly, you free up money (and motivation) to tackle larger debts, accelerating your progress.
How the Snowball Method Works: Step-by-Step
Here’s how to use the Snowball Method in simple, actionable steps:
Step 1: List All Your Debts
Write down all your debts except your mortgage. Include:
The name of the creditor
The total balance
The minimum monthly payment
The interest rate (for awareness, though it won't affect your payoff order)
Example:
Creditor | Balance | Minimum Payment |
Credit Card A | $500 | $25 |
Personal Loan B | $1,500 | $75 |
Car Loan | $7,000 | $250 |
Student Loan | $12,000 | $150 |
Step 2: Organize from Smallest to Largest Balance
Now, reorder your list based on the total balance, from smallest to largest, ignoring the interest rate.
Your updated list should look like this:
Credit Card A – $500
Personal Loan B – $1,500
Car Loan – $7,000
Student Loan – $12,000
Step 3: Make Minimum Payments on All Debts—Except the Smallest
Continue making the minimum payments on all your debts except the smallest one. For the smallest debt, throw every extra dollar you can at it.
Let’s say your budget allows you to put $300 extra per month toward debt. If the minimum payment for Credit Card A is $25, you’d pay $325 total toward it until it’s paid off.
Step 4: Roll Over the Payment to the Next Debt
Once the smallest debt is eliminated, take the total amount you were paying toward it and apply it to the next smallest debt, in addition to that debt’s minimum payment.
Using our example:
Credit Card A is paid off.
Now move to Personal Loan B:
Minimum Payment = $75
Previous Payment = $325
Total Payment = $400/month
Repeat this process until all debts are paid off.
The Psychology Behind the Snowball Method
The Snowball Method’s real strength is psychological. Early wins provide positive reinforcement, which:
Builds confidence
Encourages consistency
Helps develop discipline
Paying off a $500 credit card feels much more achievable than a $12,000 student loan. And when you check off that first debt, you’ll feel powerful—and ready to keep going.
Snowball Method vs. Avalanche Method: What’s the Difference?
Feature | Snowball Method | Avalanche Method |
Order of Payment | Smallest to largest debt | Highest to lowest interest |
Focus | Emotional wins | Mathematically efficient |
Motivation Factor | High | Moderate |
Total Interest Paid | Slightly higher | Lower |
Completion Speed | Faster early progress | Slower initial progress |
While the Avalanche Method saves more money on interest over time, many people give up too soon because they don’t see progress quickly. The Snowball Method keeps people engaged long enough to succeed.
Benefits of the Snowball Method
Here’s why the Snowball Method works for so many people:
1. Quick Wins Build Momentum
Getting rid of your first debt fast gives you an emotional boost and confidence to tackle the next one.
2. Simple and Easy to Follow
You don’t need a finance degree to figure it out. Just list your debts and follow the plan.
3. Improves Financial Discipline
As you start succeeding, you naturally become more mindful of your spending and budgeting habits.
4. Reduces Stress
Watching your list of debts shrink reduces anxiety and gives you peace of mind.
How to Supercharge Your Snowball Progress
If you want to pay off your debt even faster, use these techniques to add fuel to your snowball:
1. Create a Bare-Bones Budget
Cut unnecessary expenses like:
Streaming subscriptions
Dining out
Brand-name groceries
Impulse buys
Every dollar saved goes toward your debt snowball.
2. Start a Side Hustle
Use side income from:
Freelancing
Uber or DoorDash
Selling on eBay or Facebook Marketplace
Pet sitting
Apply 100% of that income to your smallest debt.
3. Use Windfalls Wisely
Tax refunds, work bonuses, or birthday money? Put it toward debt, not a shopping spree.
4. Sell Unused Items
Declutter your home and sell what you don’t need—old electronics, clothes, furniture—and snowball that money.
Common Mistakes to Avoid
Even with a great strategy, it’s easy to slip up. Here are some pitfalls to watch out for:
1. Adding New Debt
Avoid using credit cards or taking out new loans while working your snowball. You’re digging out of a hole—don’t grab another shovel.
2. Forgetting to Adjust Your Snowball
Every time you pay off a debt, recalculate your snowball amount and apply the full payment to the next debt.
3. Ignoring Emergencies
Build a small emergency fund (even $500) before starting so unexpected costs don’t derail your plan.
4. Quitting Too Soon
Stick with it. Progress may feel slow at first, but consistency will pay off in the long run.
Real-Life Snowball Success Stories
Sarah’s Story: From $23K to Debt-Free in 18 Months
Sarah, a teacher, used the Snowball Method to pay off $23,000 in credit card and auto loan debt. Her first debt—just $400—was gone in one month, and that momentum carried her through the rest.
John and Emily: A Couple Tackles $60K Together
They combined incomes, created a strict budget, sold one car, and worked side gigs. Their snowball payment grew from $300 to $1,000 per month, clearing all their debts in just over 2 years.
Tools and Resources to Help You Stay on Track
1. Debt Payoff Calculators
NerdWallet Debt Calculator
Dave Ramsey’s Snowball Calculator
2. Budgeting Apps
YNAB (You Need a Budget)
Mint
EveryDollar
3. Printable Debt Snowball Trackers
Download or make a tracker to visually mark your progress—checking off debts one by one is incredibly satisfying.
FAQs About the Debt Snowball Method
Is the Snowball Method better than the Avalanche Method?
It depends on your personality. If you need motivation and fast wins, snowball is better. If you’re disciplined and focused on saving interest, avalanche may suit you more.
Should I include my mortgage?
Generally, no. Focus on unsecured debts first. You can revisit your mortgage later once you’re debt-free.
Can I switch to avalanche later?
Absolutely. Many people start with snowball to gain momentum and later switch to avalanche once they’re more confident and motivated.
Final Thoughts: Why the Snowball Method Works
Debt freedom isn’t just a financial goal—it’s a life-changing journey. The Snowball Method works not because it’s mathematically perfect, but because it aligns with human behavior. We need to feel progress. We need small wins. And most importantly, we need a plan that we’ll actually stick to.
If you’re feeling overwhelmed by debt, the Snowball Method offers a way forward. With commitment, discipline, and a clear strategy, you can turn your financial situation around—one small win at a time.
Action Plan: Start Your Debt Snowball Today
Here’s your simple checklist:
✅ List all your debts✅ Organize from smallest to largest✅ Make minimum payments on everything but the smallest✅ Throw every extra dollar at the smallest debt✅ Repeat and build momentum✅ Celebrate each victory✅ Stay committed until you're DEBT FREE