MODULE 6

2. Debt Snowball Method

Steps for Debt Snowball Method

  1. List your accounts in order of size. It’s time to organize that list of debts! Put the smallest balance that you have at the top of the page, and the largest balance at the bottom.

  2. Pay off the smallest debt first. Using this method, you’ll prioritize the account with the lowest balance. You should make minimum payments on the rest of your accounts, but put extra money towards the debt with the smallest balance every month. Your goal is to pay this off quickly so you can snowball that extra money into the next smallest balance.

  3. You continue this process until all of your debt is paid off!

PRO:

This method is great for people who need motivation. Because you’re seeing results more quickly, it allows you to stay on track and meet your goals faster.

CON:

You may end up paying a little extra over time since you’re not prioritizing higher interest rates first.

See It in Action

In this video, I’ll show you how the Snowball Method works in a real life situation.

Try It for Yourself

Using page 16 of your workbook, organize your debts in order of balance size. Include the minimum payments and balances in the designated spaces. Decide if this method might work for you, and if so, give it a try! Make your minimum payments on all the other debts you have, but put your extra money towards the debt at the top of your list. As you go, adjust your worksheet and become debt free.