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How to Snowball Debt

how to snowball debt

If you’ve ever made a snowball before, you know how it works. It doesn’t take a massive amount of snow, at the start, to build that snowball. Instead, you start small, with a handful of the white stuff that you roll and roll in the snow until it becomes just the right size to throw at your brother or, if your mom’s watching, to build a giant snowman.

Snowball debt works in very much the same way. Instead of tackling your biggest debt first, you start small — building success over time so that eventually you will be debt-free. It’s a debt repayment strategy that can work — and can be a huge boost to your morale as you start knocking off those bills.

Snowball Debt -- Getting Started

  1. Identify all your debts and list them from smallest to largest.
  2. As you pay your bills each month, put the minimum amount toward all of them except for your smallest debt. When paying the monthly bill for your smallest, funnel as much money as you can toward it, so you can pay it off as quickly as you can.
  3. Once you’ve paid off your smallest debt, move up to your next smallest and so on as you continue to pay the minimum amount on all your other bills.

By moving carefully through these steps, eventually you’ll pay off your biggest debt — making you debt free.

What You Should Know

If you’re considering the snowball debt repayment approach, here are three things to keep in mind.

Always pay the minimum amount

While you’ll be laser-focused on paying off your smallest debt — perhaps that $500 credit card bill — you’ll want to pay the minimum amount on every other debt you owe. When you miss a payment or fail to cover even the minimum amount, you risk paying late fees and penalties, which can add up. It also can have an impact on your credit score. So always pay at least the minimum on all your bills.

Look for ways to cut expenses

As you set your sights on knocking off individual debt, one at a time, look for ways to cut back your other expenses or earn money elsewhere, so that you can pay off your debts more quickly. Can you shop at a thrift store instead of a big box store for your kids’ clothes? Can you pick up extra hours at work or find a side gig that will earn you a bit more money? Can you cut the cord on cable? You may need to get creative but remember that every bit — even an extra $20 or $50 a month — helps.

Understand the downsides

The psychological boost from paying off your smallest debts is great, but it’s important to remember that your biggest debts, which may come with high interest rates, also are the ones that cost you the most money.

“People underestimate how quickly interest compounds over time, and people are unlikely to prioritize their debts based on an attribute that they do not fully understand,” writes Scott Rick, a behavioral scientist at the University of Michigan, on Psychology Today. “People also tend to approach complicated tasks (like getting out of debt) by breaking them into more manageable pieces (like paying off individual debts). Effort also tends to accelerate as we approach the finish line, and thus small debts (which are closest to the finish line) may be most tempting.”

So, while it is best to pay off those high-interest debts first, writes Rick, it doesn’t retain the appeal of chipping away at the smaller debts and celebrating the victories. And, so far, nobody has made it fun to pay off those high-interest debts first.

However you move forward, it’s important to remember that every debt repayment plan has its pros and cons. Whatever you choose, it’s critical that you’re making smart decisions to pay off what you owe, so you can build a better financial future for you and your family.

If you are experiencing financial difficulty and are looking for a solution, non-profit credit counseling can help you make sense of all your options. ​Contact us today for a free financial assessment with one of our certified credit counselors.


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