Today I will be discussing what is the debt snowball method?

If you’ve ever been into personal finance you’ve probably heard of Dave Ramsey. If you haven’t, Dave Ramsey is a financial guru with his own radio show and the best-selling-book called The Total Money MakeoverI’ve been an on again, off again, listener of Dave Ramsey’s and I totally agree with his debt snowball method of paying off debt.

The greatest thing about the debt snowball method is that it’s so incredibly simple that anybody can understand it! It makes it super accessible to anybody.

Being in debt can really strangle you and make your entire life more complicated. If you’re able to get rid of all your debt, your entire life will change.

Dave Ramsey’s debt snowball method is a great way to start paying off debt because it’s based on psychology and small wins to get you started on the right foot. Let me teach you how to make the debt snowball method work for you!



What is the debt snowball method?

With the Debt Snowball Method, debts are paid off in order of lowest balance.

Order your debts from lowest balance to highest balance, disregarding minimum payment amounts and interest rates. Pay the minimum amount on all debts.

Pay as much as you can, in addition to the minimum payment, on the debt with the lowest balance. The extra money you plan to apply to debt each month is called your “debt snowball.”

Once it is paid off, apply that minimum payment + your debt snowball to your next lowest balance.

Your debt snowball will grow larger and larger as you continue adding the previous minimum payment to the next debt.


For this example, let’s say you have £100 extra to pay on debt every month:

Department Store Credit Card = £1,200; 23% interest rate; £55 minimum

Auto Loan = £7,000; 9% interest rate; £190 minimum

Student Loan = £20,000; 6% interest rate; £240 minimum

Travel Rewards Credit Card = £400; 18% interest rate; £30 minimum

Debt Snowball: £100

After ordering these debts from lowest balance to highest balance, you would focus on paying off the Travel Rewards Credit Card first, applying your £100 snowball each month.

Once that is paid off, you will move to the Department Store Credit Card. Your debt snowball at this time will be £130 (£100 initial snowball + £30 Travel Rewards Credit Card minimum payment).

Each month, you will pay £185 on the Department Store Credit Card (£130 snowball + £55 minimum payment).

Once that is paid you, you’ll target the Auto Loan (£185 snowball + £190 minimum payment). Lastly, you’ll tackle the Student Loan (£375 snowball + £240 minimum payment).

In this example, you would be paying £615 towards your Student Loan each month, an extra £375!

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Tips for the debt snowball method

  1. Create a Budget

Before you even develop a plan to pay off debt, you should create a budget which lists all of your income and expenses. You need to know where you are starting so that you have an idea of where you are trying to go.

  1. Trim the Fat

Really dig into your expenses and determine if there is anything you can get rid of. This will increase the amount you can apply toward debt payments, hence the income boost listed above.

  1. List All Debts

List all of your debts in order, beginning with the debt that has the lowest balance. Ignore the interest rates. The debt snowball method focuses on paying off the debt with the smallest balances, unlike the debt avalanche method which focuses on paying off the debts with the highest interest rates.

  1. Make the Payments

After you’ve listed all of your debts from smallest to largest, begin making the minimum payments on all balances except for the debt with the lowest balance. Any extra money, in addition to the minimum payment, should be paid towards the debt with the lowest balance.

  1. Earn Extra Income

If you’ve trimmed the fat from every expense that you could and your income is still not enough to kick start your debt payoff, then you might have to pick up a part-time job or start some sort of side hustle. If you need extra income to help get rid of your debt, check out my blog post for

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Debt snowball method excel template

If you want to see quickly how long it will take you to pay off each debt, the best way to do that is using a pre-designed debt payoff spreadsheet. I used the Google Sheets Debt Payoff Template

They also have an Excel version of the Dave Ramsey Snowball Concept and you can choose between the Snowball method or the Avalanche method of debt payoff.


Why the debt snowball works

The debt snowball method leverages momentum over math.

The idea is to get a quick win by paying off a small debt first. This win will give you the motivation to continue aggressively attacking your debt.

It’s the same psychology that’s necessary for weight loss. If you can lose those first few pounds quickly, you’ll be motivated to continue your regimen and lose more weight.


This approach is what distinguishes it from the debt avalanche method.

The debt avalanche method is intended to save you the most money overall by attacking your debt from the highest interest rate to the smallest.

Though, both methods will get you to the ultimate goal of paying off debt.


Make sure your debts are organised

This has to be the first step before you even start to plan your debt snowball. You’re going to find it pretty tough to use the snowball method effectively if you don’t organize your debts. You need to know exactly how many debts you have and how much they total.

From there, you can work out your smallest debt and begin the snowball effect. This is one of the steps many people struggle with.

It can be daunting and let’s face it, depressing, writing down everything you owe, and actually seeing it there in front of you. However, by doing so, you’re actually taking control over your finances, rather than letting them control you.

Plus, you’ll soon start to feel much better when you put the snowball method into effect and you see those debts coming down.

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Why does this method work so fast?

As you pay off debts, the amount that you’re paying on them increases. There are no minimum payments allowed on the snowball debt method–and that is why it works!

Instead of languishing behind constant interest {which never stops} you’re steadily increasing your payments so you can finally get ahead and stay there!


My opinion on the debt snowball method

It really depends on your circumstances, but this is definitely a great debt strategy for someone who is feeling overwhelmed by debt.

If you have many debts with varying balances this method could help you to focus on one debt at a time.


I think the biggest benefit of The Snowball Method is that it can be very encouraging to see each small debt disappear.

Eliminating a debt feels incredible and it is likely to motivate you to continue paying off the rest of your debts.

You’ll probably pay a little more (or maybe a lot more depending on your circumstances) in interest in the long run. That’s something that needs to be weighed against the motivation benefit of this method.


What is the debt snowball method – Final thought?

When paying off debt, you must realize that it won’t be easy. No sacrifice is ever easy. If you want to change the trajectory of your life and that of future generations, stay focused and put it in the work.

The debt snowball method really works and it allows you to see your actual progress much quicker than if you had started paying on the highest debt first.

It also keeps you motivated and if followed correctly can have you living a debt-free life sooner than you think. I wholeheartedly encourage you to use this method because it will change your life. It certainly changed mine.

What are your thoughts on the debt snowball method?

If you found this post useful, you might want to save THIS PIN below to your Pinterest Debt board for later!