What Is The Snowball Method?

Debt Repayment

When I ran the reader-survey, most of you stated that you wanted to learn more about my debt-repayment process. It’s been awhile since I’ve posted about it. I guess the excitement of paying off my car was still pretty high so I wasn’t as focused on my credit card plan. I have also ended up charging some recent events onto my card, so even though my balance wasn’t increasing, it also wasn’t plummeting in that really fun snowball way.  So it seemed like a good time to refocus and give you guys an update!
What is the snowball method? How to pay off debt faster using the snowball method!
Before I get to that, I wanted to talk to you guys about the method I use: The Snowball Method. I’ve been using it for so long now that I take for granted that everyone knows what it means.  I got this question from Polly and wanted to share my answer, just in case anyone else had the same question. Next week, I intend to have a more detailed explanation of my remaining debt payoff plan and a printable for all of you to download.

Can you tell me what you mean when you use the term snowball effect? I want to put myself on a tight budget and lower my student loans. Can you tell me how you put together a budget? I need help. I love following along with your stories on your blog.

Any help would be greatly appreciated.

What is the Snowball Method?

Here’s my reply:

Hi Polly!

Thanks for your great question! You’ve inspired me to write a post explaining what I mean by snowball method! It is a method that apparently has been around for awhile, but gained popularity when Dave Ramsey really started promoting it. You can read all about it on his website here.

Basically, you first take all of your bills and create a list. Subtract that list from how much money you take home each month after taxes. Then create a budget (it’s not as scary as it sounds!) that shows how much you expect to spend on gas, health care, clothes, etc. From there, you’ll see how much “extra” you have each month.

Then, on another piece of paper, list your debt in order of lowest balance to highest balance. This might feel scary, but it will be OK! Find out what the minimum payment is for each one, and plan to pay that in your monthly budget. However, on the lowest balance you’ll also include the “extra.” Even if it’s only like $25, it helps! Keep paying that extra on the lowest balance until it’s paid off.

Then, when debt #1 is paid off, you take what you were paying on debt #1 (minimum + extra) and ADD IT TO debt #2’s minimum payment. So now you’re paying debt #1 minimum + debt #2 minimum + the “extra.” It starts to add up like a snowball. For example, my  credit card number 1 minimum was $40, then #2 was $70, while my “extra” was $300. When I paid off card #2, my “snowball” became $410. Then when I paid off my car (a very hefty payment), it became $925. So I take my $925 and apply that to my credit card #3 along with that minimum payment ($40) and make that payment. Although, now I put $100 into savings, but that’s not the true snowball method way to do things. I just thought it made more sense.

What is the Snowball Method?

When I pay off my last credit card, ALL of that money will go to my smallest student loan, which already has a minimum payment of $115. So I will add that to the snowball and keep going. That means my snowball will be $965 (snowball + minimum) + the $115 minimum payment. By that time, my smallest student loan could be paid off in less than 1 year. I can’t even imagine what that will feel like!

What the snowball method really does is keeps you from feeling like you got a “raise” when you pay off debt. There’s still debt to pay off so that money, which you’re not used to having, immediately gets a greater purpose. I know when I was younger, if I paid off a debt I thought, “Yay! Forty more dollars to spend on something fun!” But in reality, there is a much bigger purpose for that money.

There is another method for debt repayment called the Avalanche method. That format orders your debt payment by highest interest rate. This isn’t a bad idea, but it does not come with the instant gratification of paying off a credit card or other loan really soon after starting. If you’re someone who reacts more positively to instant results than scary math, the Snowball method is probably right for you.

Does that all make sense?? I’ll also work on a budgeting post in the future. That’s a much bigger question. :) For now, I’d super recommend you peruse Dave Ramsey’s site. He has some good printables on there. There are also a couple money related podcasts I listen to that keep me motivated to pay off debt and sacrifice now for the great sense of payoff in the future, those are Listen Money Matters and Her Money Matters.

What is the Snowball Method?

I also recommend downloading the Mint app. That’s how I keep track of all of my accounts and remind myself that I don’t always have money for fun, because my net worth is like negative 100,000 something due to those awful student loans! Seeing the big picture has been a good motivation for me.

I’d love to hear how your debt repayment goes!


Do you use the Snowball or Avalanche method? I’d love to hear your experience in the comments too!

Do you have questions about my debt repayment plan, or any of my other posts? Click “Contact Me” above and send me an email through that form! Or you can message wheremysoulbelongs at gmail dot com! Maybe your question will get featured in a blog post!

What is the Snowball Method?
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  • Reply
    June 23, 2016 at 5:15 am

    Thanks for sharing this! I’m so glad you were able to break this down, as I’ve been wondering as well how it works.
    Rachael recently posted…Rachael’s Guide to Shanghai Disneyland

    • Reply
      June 26, 2016 at 11:50 am

      I’m glad it can help, Rachael! Feel free to text me any time :). It’s been very successful for me!

  • Reply
    June 23, 2016 at 6:56 am

    We’re kind of doing the snowball method, but a few medical bills decide they can’t wait to be paid, so we have to pay the rest off at once. Then we get new bills (hello doggy needing surgery and a/c breaking), so I’m trying to bulk up our savings (it’s slim because we’re slow learners) so there’s not any extra being paid toward bills right now. We have paid off two credit cards and one student loan since getting married, though. Hopefully I’ll be able to stop readjusting the snowball method and just pay it all off soon!
    Breenah recently posted…Reading? What’s That?

    • Reply
      June 26, 2016 at 11:52 am

      Ahh I hate when that happens! My student loan payment will go up this fall and it’s totally screwing up my plan! But as long as you stay focused, you’ll get through the obstacles. I’m bad at keeping my savings account “bulked up” as well. It’s something I hope to get better at as I get older. Keep me posted on your journey!

  • Reply
    June 23, 2016 at 8:00 am

    Dealing with debt can be scary! Being a 26 year old college grad and entrepreneur, sometimes I feel like I’m drowning in the sea of debt and finances. An although the Snowball Effect is very helpful, I’m going to be honest, when starting from the ground up and your monthly income isn’t necessarily sufficient enough to handle beginning the snowball method, it can get discouraging. However, seeing this post only encourages me as a reminder to take care of the things that need to be taken care. Credit is everything! If only we we taught these things in school. Thanks for sharing Brittany!

    • Reply
      June 26, 2016 at 11:56 am

      I 100% understand, Sarah! When I first started the snowball method, my “extra” payment was $25 a month. It felt as slow as molasses and was sometimes so frustrating! I often felt very discouraged. But I saw this quote on pinterest (unfortunately I don’t know who said it), that said, “Don’t put off something because of the time it will take, the time will pass anyway.” Even today when I feel like I’ll never be free of debt, I remind myself of that. Just keep doing what you can, no matter how small, and you’ll be so grateful by the time your business really takes off and you can increase your snowball! It will happen. At 26 I was making half of my current income and had to call my dad and ask for money when AT&T charged me twice. At 28, the economy finally turned around, and right before I turned 29 I doubled my income. I was grateful for the baby steps of progress I had made before that happened. Ever since, I’ve put all of my extra money towards debt. Sometimes I end up buying new things and charging them (because my extra money is spoken for), but it’s a marathon not a sprint. And the time will pass anyway. I’d love to hear how your journey goes!

  • Reply
    June 23, 2016 at 10:15 am

    The snowball debt payment method is so great! We’re working to get our debt taken care of too and it’s so helpful!
    Susannah recently posted…Confidence in Your Summer Wardrobe

    • Reply
      June 26, 2016 at 11:59 am

      That’s so awesome! Good luck!

  • Reply
    June 23, 2016 at 12:14 pm

    I hear once of that method but didn’t it was called by that. But now I understand it better. Thanks!!

  • Reply
    June 23, 2016 at 2:23 pm

    Thanks for explaining the snowball method. I’m working on paying off credit cards, so this post came at an extremely useful time!

    • Reply
      June 26, 2016 at 12:22 pm

      Oh good! Good luck on paying them off! It’s a rewarding journey!

  • Reply
    Ref J
    June 23, 2016 at 3:17 pm

    I have used the snowball method and it works! It is scary to tackle your debt but it is such a rewarding experience to be debt-free and focusing on saving money for my future as opposed to constantly paying off heaps of credit card debt.

    • Reply
      June 26, 2016 at 12:23 pm

      You’re so right! I can’t wait to be at the point where my money goes to saving for my future. Thank you for sharing your inspiring story!

  • Reply
    Jen Hemphill
    June 24, 2016 at 10:38 am

    Thanks for the mention of my podcast Her Money Matters Brittany! Great breakdown of the snowball method too! You have got a great blog here, keep up the amazing work. Abrazos! Jen

    • Reply
      June 26, 2016 at 12:24 pm

      You’re welcome! Thanks for stopping by :). I really love the work you do and am excited to now be a part of the Facebook group!

  • Reply
    Alix Maza
    June 27, 2016 at 5:18 pm

    As a college student, I love the Mint app! It’s so useful.

    Alix | http://www.apintsizedlife.com

  • Reply
    Laura @ One Dish Away
    June 27, 2016 at 8:41 pm

    Such an amazing idea!! I am actually incredibly excited to try this out. (You know you’re getting old when you get excited over new budgeting techniques!). Thank you so much for sharing!

  • Reply
    June 29, 2016 at 8:30 am

    Fabulous, I am from England and found Dave Ramsey when I was having hard times with money. I was an early Christian paying off debts from my misspent youth.

    A great post.

  • Reply
    Law School Student Loan Payoff Progress Report - Month 2 -$124,439 - Where My Soul Belongs
    October 12, 2016 at 3:19 am

    […] money at the same, or basically the same, interest rate is the same no matter which loan you pay. So, I’m sticking with the snowball method. It served me really well on the credit cards and car debt, so I figure I’ll keep the streak […]

  • Reply
    An Introduction to Dave Ramsey - stephanieorefice.net
    February 20, 2017 at 10:02 am

    […] Pay off all debt using the debt snowball List all of your debts based on balance from smallest to largest, with no concern of interest rates. You are going to pay the minimum payment on all of them except the one that’s on the top. Then you’re going to attack that one like it stole your puppy. Extra jobs, selling things, overtime, a scaled back lifestyle. Whatever you can to get extra money, you throw it at the smallest one. Once that one is paid off you take the minimum balance on that one PLUS all of that extra money you’re earning and add that to the second smallest. Get the snowball idea? My friend Brittany wrote a post about it, so you can read more about it here. […]

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