5 Steps to Paying Off All of Your Debt – Your Definitive Guide to the Debt Snowball Method

Have you ever heard that a Debt Snowball is the answer to ALL of your money problems?

Do you struggle feeling motivated making minimum payments to your mountain of credit card debt and car loan?

Do you feel like your debt mountain never actually gets any smaller?

Have you found some extra room in your budget to start tackling your debt mountain faster?

If you said “heck yes” to any of these questions, the Snowball Method might be right for you! 

Are you ready to find some quick wins and motivation to pay down and pay off your debt? 

Keep reading to find out how!


What is the Debt Snowball Method?

The Snowball Method is a debt consolidation and paydown method that helps motivate YOU to pay down your debts. 

The Debt Snowball idea originated as part of Dave Ramsey’s Baby Steps.

While you may or may not agree with Dave Ramsey and his baby steps (and I have my own opinions), the Debt Snowball is an effective plan entirely on its own.

Rather than splitting your money to pay them all down equally, the Debt Snowball method focuses on putting any extra money you have into your smallest debt and paying off the smallest balance before moving onto the next one. 

Each time you pay off that small debt, you take the money you were putting into that debt and move it to the next smallest balance. 

Over time, your money turns into a bigger and bigger snowball rolling down your debt hill until you eventually hit the bottom DEBT FREE! 

debt free snowball


How Does the Debt Snowball Work?

There are 5 easy steps to building your Debt Snowball:

Debt Snowball Step 1: Make a list of ALL of your debts from lowest balance to highest balance.

First, take a deep breath, and write it all down. Yep, all of it!

Some people will tell you not to focus on just consumer debt, ignoring your mortgage if you have one.

I believe that since your mortgage is part of your debt, you should include it for visibility here.

Plus, after you get to the bottom of your snowball, paying off your mortgage may be a lot easier!


Debt Snowball Step 2: Pay the minimum payments for all of your debt.

If you’re not able to pay down your debt right now, it’s not the time to start a snowball.

Instead, focus on paying down your minimums (and not taking on any more debt) before you get started.


Debt Snowball Step 3: Put all extra money towards your lowest balance.

Pay down that debt with any extra money you find or make.

Did you build your budget and find some ways to save on your discretionary spending?

Didn’t stop for coffee or go out for lunch today?

Made some money with your side hustle?

Found $5 in the couch?

Then put it towards your debt!


Debt Snowball Step 4: When you’ve paid off the first debt, take the minimum payment AND your extra cash, and put them towards the next smallest debt. 

This is where the snowball starts to build!

Don’t forget to reward yourself to keep yourself motivated- paying down debt is hard!

Pop a cheap bottle of champagne, or find a budget-friendly way to celebrate your first big win!


Debt Snowball Step 5: Repeat until you are DEBT FREE!

While it may feel like it’s impossible, remember that you CAN do it! 

debt free snowball step by step


Does the Snowball Method Actually Work?

YES! Let’s try an example:

Debt Snowball Step 1: Make a list of ALL of your debts from lowest balance to highest balance. 

Let’s say you have 3 debts right now. If you put your debt in order from smallest to largest balance, they look like this:

  • Credit Card #1: $3,000 at 18% interest, minimum payment $75
  • Credit Card #2: $6,000 at 21% interest, minimum payment $164
  • Student Loan: $27,000 at 8%, minimum payment $327 


Debt Snowball Step 2: Pay the minimum payments for all of your debt.

If you add up all of the minimum payments, you’ll need to pay $566 in minimum payments before you start your snowball. 


Debt Snowball Step 3: Put all extra money towards your lowest balance.

Let’s say your extra cash at the end of the month is $200. You’ll put that towards Credit Card #1. 

Now, if you only paid the minimum payment on Credit Card #1, it would take you 5 years and 2 months to pay it off. And you would pay $1,615.73 in interest over that 5 years.

Instead, by adding your $200 in extra cash to start your snowball, you’ll pay that card off in 1 year and 1 month. And you’ll only spend $300 in interest! 

You just saved 49 months of paying down debt AND $1,300 in interest! 

You’ve earned a glass of champagne! 


Debt Snowball Step 4: When you’ve paid off the first debt, take the minimum payment AND your extra cash, and put them towards the next smallest debt.

Now onto the next one! 

Now remember that you’ve been paying down Credit Card #2 at its minimum payment for the same 13 months. This means your current balance is now $5,147. 

If you continue paying only the minimum payment, you’ll have this credit card paid off in a total 4 years and 11 months. AND you’ll pay $3,664 in interest over that time. 

But thanks to your snowball, you can now add the $75 minimum payment from Credit Card #1 AND your $200 monthly savings to that payment! 

With your new payment of $439, it will only take 1 year and two months to pay off Credit Card #2. And only pay $665 in interest. 

Less than 3 years into your snowball, you’ve already paid off 2 credit cards, saved $4,272. AND cut a SEVEN YEARS off of your payment plan! 

Great job! Now let’s finish off your debt!


Debt Snowball Step 5: Repeat until you are DEBT FREE!

While you’ve been doing an AWESOME job making big debt paydowns, you’ve still been paying down your big student loan at its minimum payment- and now it’s time to knock that big balance out!

Since you’ve paid off both credit cards, you can now take the $239 from both minimum payments and your extra $200 and add that to your regular $327 student loan payment. 

After 27 months, your student loan balance is now down to $23,529. 

If you keep paying the minimum payment, you’ll pay off your student loans in 10 years and 1 months total, racking up $12,347 in interest over that period. 

But you have a snowball!

Instead, with your $766 monthly payments, you’re going to knock out your student loan debt in just 2 years and 10 months more, paying $3,880 in total interest on the loan. 

You saved yourself almost 5 more years of debt payments AND over $4,800 in debt!

In a little over FIVE YEARS, you are completely DEBT FREE!

You’ve saved over $12,000 in interest payments AND be debt free four whole years early! 

chalkboard my goals financial freedom


Is the Snowball Method the Best Way to Pay Down My Debt?

While it’s hard to argue with the Snowball Method, there are other debt payoff methods that can help you pay off the exact same debts in a shorter period of time. 

For example, the Debt Avalanche Method focuses on paying down your debt with the highest interest rate. This can often be more effective in paying down debt. 

If you with struggle with motivation while paying down debt, the Snowball Method may be a better option. for you 

If you can push through without any big wins for a while (almost 2 years before Credit Card #2 would have been paid off in the example above), then the Avalanche Method might be a good fit for you. 


Are you ready to try the Snowball Method for paying down your debt? Or are you planning on checking out the Level Up guide to the Avalanche Method instead?
Share your plans in the comments! 
And if you want to be the first to read my new posts, sign up here to receive a notification in your email! 


Related Debt & Savings Posts:
5 Steps to Crush Your Debt with the Debt Avalanche Method
Budgeting 101: Your Complete Guide to Building Your Budget
How a Sinking Fund Can Keep You On Budget and Out of Debt
Emergency Fund 101: Why You Need an Emergency Fund


debt snowball pin snowballs