Debt payoff method
Debt Snowball Method
Educational information only: This article is general information for learning. It is not personalized tax, legal, investment, or money guidance.
The debt snowball method is a payoff strategy built around momentum. Instead of starting with the highest interest rate, you start with the smallest balance.
Quick answer: Pay minimums on every debt, send extra money to the smallest balance, then roll that payment into the next smallest debt after the first one is gone.
How it works
1. List every debt
Include balance, minimum payment, interest rate, and due date.
2. Sort by balance
Put the smallest balance first, regardless of interest rate.
3. Pay minimums on everything
This protects every account while you focus the extra payment.
4. Roll payments forward
When one debt is paid off, add that old payment to the next debt.
Benefits and tradeoffs
| Benefit | Tradeoff |
|---|---|
| Faster visible wins can help motivation. | You may pay more interest than the avalanche method. |
| The order is easy to understand. | High-interest debt may wait longer. |
| Progress feels concrete. | It still requires stopping new debt. |
When it may fit
The debt snowball may fit if motivation is the main problem and small wins help you stay consistent. It may be less efficient if your largest interest rate is much higher than the rest.
Sources
Frequently Asked Questions
The debt snowball method pays minimums on every debt, then puts extra money toward the smallest balance first.
Not always. The debt avalanche method usually targets higher interest first and may save more interest.
People who need motivation from faster small wins may prefer the debt snowball method.