If you’re looking to pay off your debt, you might be considering different debt payoff methods. One strategy that may work for you is the debt snowball method. In this article, we’ll cover what the snowball method is, 3 reasons it’s so effective, whether it might be a good fit for you, and other payoff strategies you can consider.
What is the snowball method?
The snowball method is a payoff plan that focuses on eliminating your lowest balances first. You’ll continue to pay minimum balances on all your debts to avoid late fees and damage to your credit score, but any extra cash will go toward your smallest debt. Once that debt is paid off, you’ll focus your attention on the next smallest debt. You’ll continue this cycle until you’re completely debt free.
3 reasons why the snowball method is so effective
1. You’ll build momentum
As you pay off debts with the snowball method, the extra cash put toward your debts grows quickly, just as a snowball rolling down a hill gathers more and more snow. By getting rid of the small debts first, this positive reinforcement cycle allows you to build momentum and stay motivated on your debt payoff journey.
2. You’ll feel in control
The debt snowball method gives you a blueprint for getting out of debt. By following the steps and seeing progress, you’ll feel in control of your finances. And by seeing your small debts get wiped out, you’ll have proof that the plan is working.
3. You’ll gain confidence
Your visible progress (seeing debts paid off and fewer balances due) can give you the confidence you need to stay focused on paying off your balances. We get it—paying off large amounts of debt can feel overwhelming. But by attacking your debt with the snowball method, you’ll feel confident about your money skills and financial situation overall.
Is the snowball method right for me?
If your debt feels daunting and you need a little encouragement to pay it off, the debt snowball method might be the right fit for you. However, if your main goal is saving money, then you may want to go with a different strategy, like the debt avalanche method (see below).
Other debt payoff strategies
Two other strategies to consider include the debt avalanche method and a balance transfer:
Debt avalanche method
With the debt avalanche method, you’ll focus on eliminating your highest-interest debts. You’ll still pay the minimum amounts on your debts, but extra money will first go toward the debt with the highest interest rate. Once that’s paid off, you’ll focus on putting money toward the debt with the second highest interest rate. The debt avalanche method is best for saving money overall.
When you consolidate your debt with a balance transfer, you’ll take out a new credit card (ideally with a low or 0% promotional period interest rate) to pay off your existing credit card debts. Balance transfers can save you money on interest and simplify your bill paying each month.
However, you’ll need a good credit score to qualify for a 0% APR card. And if you can’t pay off your balance by the time the promotional period is over (typically 12-18 months), then you could be stuck paying a very high interest rate on your remaining debt. Plus, you might need to pay a balance transfer fee. Make sure that the money you’ll be saving in interest makes the fee worth it.
The debt snowball method might be a good fit for you if you need some extra motivation and positive reinforcement to crush your debt once and for all. Good luck and snowball on!
Stefanie began her career as a journalist, reporting on options, futures, and pension funds, and most recently worked as a writer and SEO content strategist at a digital marketing agency. In her free time, she enjoys teaching Pilates and spending time with her daughters and Siberian Husky.