Dealing with Debt

How to Use the Debt Snowball Method

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If you owe money on multiple credit cards, you may be wondering where to focus your efforts and which card to pay off first. Some financial experts believe, when attempting to manage your debt, you should aim to eliminate the card with the highest interest rate first. While this method is very effective, if the card with the highest rate also has the highest balance, it may take over a year or two to make a dent in the balance, leaving you feeling like you’re spinning your wheels and getting nowhere.

Instead, try focusing your efforts on eliminating the smallest balance first and gradually moving on to your higher balances. Using this method, known as the Debt Snowball Method, you will see results and a “light at the end of the tunnel” much faster. Dave Ramsey is a big advocate for this method and he talks about it frequently.

We are going to discuss the Debt Snowball Method in length, so you have a firm knowledge of this debt repayment methodology, and perhaps learn if it’s right for you. Are you the type of person who needs to see instant results to know that something is actually happening? If so, then you might prefer the Debt Snowball Method and hopefully payback your debt on your own. We are always here to help if you decide that you can’t do it alone, and you need professional advice and help. We are only a phone call (866-699-2227) or one mouse click away (www.advantageccs.org)!

Who Could Benefit From Using The Debt Snowball Method?

This method is particularly good for consumers that have numerous credit cards with outstanding balances. If some of your credit card accounts have small balances and they are getting annoying to pay each month, then the debt snowball method would also be a good fit for you. The debt snowball technique is also a good psychological boost for people that feel discouraged by their debt and bothered by high-maintenance payments. This method is designed to get you fast results when paying off your debt, and it will appeal to individuals that get disheartened or upset easily.

How Does The Debt Snowball Method Work?

Using the debt snowball method, you would focus on paying off the smallest debt first while just making the minimum payments on the rest of your debt. First, start by listing ALL of your credit card debts (in order) from the smallest balance to the largest balance. Next, total up the minimum payments you are making on all of your cards to see how much you are paying each month. Continue paying the minimum on all of your cards except for the card with the lowest balance. If possible, try to add more money to that monthly payment. Paying more than the minimum will help you pay off the balance faster. For example, if your smallest debt is $100 with a $10 minimum payment, by increasing your monthly payment to $20, you will pay off the balance in about 6 months versus 10 months.

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Once you have eliminated the balance on your lowest credit card, the debt repayment snowball effect begins. Now, you will apply that $20 you were paying on your lowest card to the next lowest balance in line. If you were paying $30 a month minimum payment on that card, you would now be paying $50 a month. Once that balance is eventually paid off, apply that $50 you were paying per month to your next lowest balance, and so on and so forth.

debt snowball method

What Happens Next?

The debt snowball effect will keep rolling until all of your credit cards are paid off. With the “debt snowball” method, the successes of paying off a credit card occur more regularly throughout the process, meaning it’s better for keeping your encouragement up as you repay, even though you may pay more interest in the long run.

If you think you will get frustrated and give up if you do not see instant results, then you might want to go with the “debt snowball” method. This technique is actually the most preferred method among people trying to pay off their debt. One reason for that could be because it’s not about how to pay off debt in the most efficient way, it’s about paying off debt in a way that brings results. It gives you support, which can boost your overall outlook about your debt.

If you have questions about The Debt Snowball Method or you need some help and advice on paying off your unsecured debt, contact us today! We are more than happy to answer any questions, and we want to help you get out of debt as quickly as possible!

Has anyone tried The Debt Snowball Method? If so, we’d love to hear from you about how it worked out. Please leave a comment below! Thank you!


Author: Lauralynn Mangis
Lauralynn is the Online Marketing Specialist for AdvantageCCS. She is married and has two young daughters. She enjoys writing, reading, hiking, cooking, video games, sewing, and gardening. Lauralynn has a degree in Multimedia Technologies from Pittsburgh Technical College.