What is the "Debt Snowball Method?"

If you listen to Dave Ramsey online, you probably have heard of the Debt Snowball. The Debt Snowball, or Baby Step 2, method of getting out of debt is tried and true.

How does it work?

• Step 1: List your debts from smallest to largest, not including your mortgage

• Step 2: Start paying off your debt starting at the top of the list, with the smallest debt.

  • Pay all the minimums on all your debts

  • If you have any additional money to put towards debt, add this to your minimum payment for the SMALLEST debt only.

• Step 3: Pay off the smallest debt – Continue putting the most money you can towards the smallest debt until that debt is 100% paid off!

• Step 4: Once the smallest debt is paid off, you will move to the second smallest debt on the list. You will pay all the minimums on all debts. Any additional money (including what you USED to pay on the smallest debt) will be added to the minimum payment of the smallest debt on your Debt Snowball list.

• Step 5: Continue Steps 3 and 4 until you pay off ALL debts on your Debt Snowball list.

Wait... What?

Now, you may be saying to yourself, but shouldn’t I pay off the debt with the highest interest rate first? I thought this too, in the beginning. And, I tried it! I kept at this method for about 2 years.

What ended up happening was I lost momentum and kept trying over and over to stick to it, but my highest interest rate was also one of my highest balances. Every month I felt like a failure because I didn’t seem to be making any progress. In fact, I ended up owing more than I did when I started.

With this experience, I thought, ‘Maybe I should try the Debt Snowball way since my way didn’t go so well.” When I started to do pay off debt using the Debt Snowball method, what happened seemed almost miraculous at the time because I was in such a stressful and burdensome place with my finances.

The Debt Snowball Method gave me hope! It gave me the possibility that there was a little light, that there was even a tunnel and it had an ending!

Now, I was beginning to see why the way I tried before didn’t work. It didn’t give me any traction; I didn’t feel like I was making progress and it shot down all the confidence that I had in myself that I could claw my way out of this mess.

With the Debt Snowball method, you will:

• Gain some traction quickly

• Feel like you are making progress

• Begin making a dent in your overall debt owed

• Start gaining confidence and control with your money

• Have a tested plan to get out of debt once and for all

Your Debt Snowball doesn’t have to be fancy; it doesn’t need to be in a spreadsheet or on an expensive app. You just need a piece of paper, a pencil, and an old school calculator. It does not take much and there is NOTHING you need to buy.

You can start getting out of debt TODAY!