Ready to get out of debt for good? The debt snowball method can help you do exactly that, because it’s both highly motivating and effective.
But before I tell you how the debt snowball method works, let’s talk about why it works — because that’s where the real magic lies.
Why the debt snowball method works
Being in debt usually means you didn’t want to wait to buy the things you wanted or needed, and so you used credit to get them right away. In other words, you’re not a fan of waiting around.
You’re probably not a fan of waiting around when it comes to getting out of debt either, so you may as well use that tendency for you.
The debt snowball method works because it starts you off on the right foot by quickly showing you that you can succeed, and then it keeps you motivated along the way. You won’t have to wait years before you see progress.
If you’ve got a bunch of different things you owe varying amounts of money on — say, a thousand dollars here, or three thousand there — you’ll start off by making some quick progress. You’ll see results faster than you might imagine, and you’ll feel good about what you’re doing.
That means that instead of trying to get out of debt and then giving up, you’ll keep right on working at it because you’ll have proof that you can do it. You’ll go from feeling stressed out and hopeless to hopeful. The debt snowball method is highly motivating, because those small successes at first make you want to keep at it.
How to use the debt snowball method
To use the debt snowball method, you usually start out by organizing your debts from the lowest balance to the highest balance, regardless of interest rate. (If the thought of doing that makes you want to explode because it doesn’t make sense math-wise, read “Am I bad at math too?”.)
You then pay as much as possible to the first one in your list. Basically, you chuck as much as you can scrounge up or earn toward that first creditor to get it GONE. At the same time, you make only minimum payments to all of your other creditors. Don’t try to send an extra $20 to each one. If you want to send in extra money, send it ALL to your main target. Pummel it with those snowballs.
Once your very first credit card (or whatever’s first on your list) is paid off, you’ll feel really good. You’ll also end up with even more money to send to the next one — because you’ll no longer owe anything on the first one you targeted.
Over time, you begin to chuck more and more money toward each remaining target. In other words, the amount of money you’ve got available to send in grows and grows, until eventually it becomes a debt avalanche. (If you’re using the Pay Off Debt snowball app, you can easily see exactly how that works.)
You just really get on a roll, annihilating your debts by using the debt snowball method.
It’s motivating — especially if you organize things in the traditional lowest-balance-first order — because you quickly make progress instead of feeling like you’ll never get anywhere. And when you see progress, you keep going. So not only does the repayment itself snowball, your excitement and commitment snowballs too, leading to still more progress.
It’s a great way to get out of debt.