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Home > How To Work The Debt Snowball And Get Free

How To Work The Debt Snowball And Get Free

April 12th, 2011 at 02:37 pm

There are many varying opinions on the best and most efficient way to get out of debt. My humble, yet strong, opinion is that the absolute best way to pay off your debt is the Debt Snowball method. Why this method? Because we used the Debt Snowball to help us pay off over $50,000 of debt in only 16 months.

The Debt Snowball has been around for decades and has helped thousands of people pay off millions in debt. Below, I have outlined the basic strategy for working the Debt Snowball. It’s simple…but it works!

Now the question on your mind is probably, “Why is this method the best?”The answer is simple…momentum! Think of a small snowball rolling down a hill. As the snowball rolls it picks up speed, and the speeding snowball grows and grows as it picks up more snow. Before long you have an unstoppable globe of compacted ice barreling forward, Indiana Jones and the Temple of Doom style.

The Debt Snowball allows you to see some quick-wins as you pay off your smaller debts. These quick wins create momentum and solidify a belief that you can win this battle. This belief and momentum will help you keep your intensity and tenacity throughout the process so that you can finally beat debt and be free for good!

So I present you with a step-by-step guide to working the Debt Snowball!

Step 1: List all of your debts from smallest balance to largest!

This list will need to include every debt that you and your spouse have. It’s usually not much fun to see all of your debt listed out this way. But to get where you want to be, you have to know where you are starting.

Auto loans, credit cards, past-due medical bills, personal loans, student loans, business loans, loans from retirement accounts, loans from family & friends, and any other loans you may have need to be included in your debt list.

Gather all of your account statements and list out the name of the creditor, account balance, interest rate, and minimum monthly payments due. To make sure you didn’t leave any debts off, it will help to pull a free copy of your credit report. You can get free copies of your reports at annualcreditreport.com.

Step 2: Wage war against the smallest debt.

Commit to making the minimum monthly payment on all of your debts. Then with every bit of extra money you can earn or squeeze out of your budget, you will attack the debt with the smallest balance. In our example debt list, you would pay the monthly balance on all debts and you would focus all extra money to pay off the Medical Bill.

Notice that this is not the debt with the highest monthly payment or the highest interest rate. Again, the reason we are going in this order is so that you can see some quick results and build momentum.

Step 3: Move on to the next smallest debt.

Once you have completely paid off the smallest debt, move on to the next smallest. Continue to make the minimum payments on all other debts, but you will now apply all extra money to pay off the next debt on the list.

In our above example, the Medical Bill had a minimum monthly payment of $50. You will now apply this $50 per month toward Credit Card 2. You will also use any bit of extra money to attack this debt.

You see, now the snowball is rolling over and picking up more momentum and more snow. There’s now an extra $50 each month to go toward the 2nd debt.

Step 4: Repeat Steps 2 and 3 Until You Are Debt Free!
(I didn’t intentionally make this rhyme…I promise)

Note that your home mortgage is not included in the Debt Snowball. You will pay off your mortgage later on in your journey toward Financial Freedom.

By the time you get to your largest debts, you may be able to throw thousands of dollars toward the balance every month. That’s a huge snowball rolling downhill, destroying every debt in its path. Most people are able to complete the entire Debt Snowball process in 24 months or less.

The keys here are focus, intensity, and commitment to the goal….Being Debt Free!!!

You can do this! Trust me…if we could do this, anyone can!

Yours In Freedom,


Join the conversation…what debt will you be paying off first?

3 Responses to “How To Work The Debt Snowball And Get Free”

  1. snafu Says:

    the 'snowball' can work if the whole family will get on board with the need to pay-off debt. If DW or DKs are still using CCs behind your back...you're sunk.

    2nd...you need to know where your money is going. How much will you budget for food, utilities, transportation, insurance etc. What are you willing to sacrifice short term - for the elimination of debt

    3rd, no matter how small, set up a sum to start an emergency fund.

  2. clintdavis Says:

    Well said, Snafu. Both spouses must be on board with the financial goals, budget, and overall plan in order to be successful.

    Thanks for the comment.

  3. snafu Says:

    Clint: you've done an ace job of offering a clear example of how the system works and the steps participants need to take. You've 'led the horse to water, I hope those needing to follow the process will do the hard work.

    I was so alarmed today when they mentioned in passing that the USA government debt was now 90% of GNP. it seems the government will devaluate the dollar, raise interest rates, encourage inflation and [in investment terms] steal from savers. The rest of the world feels it's walking on egg shells.

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