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  • Writer's pictureRob Winkler

Debt Snowball Method: A Proven Strategy to Attain Debt Freedom

In a world where debt payments no longer dominate your financial landscape, you can experience the freedom of having no student loans, car payments, or credit card bills. By adopting the powerful debt snowball method, you can liberate an additional $300, $500, or even $800 in your monthly budget. Welcome to the debt-free life.

But what exactly is the debt snowball method? It is a highly effective debt reduction strategy that involves paying off debts in order of smallest to largest, regardless of their interest rates. This approach not only expedites debt repayment but also focuses on changing your money behavior to prevent future debt accumulation.

Here is a breakdown of the debt snowball method's steps:


Step 1: Create a list of your debts, starting with the smallest balance and ending with the largest.


Step 2: Make minimum payments on all your debts except the smallest one. Devote as much money as possible to eliminate the smallest debt entirely. Once it is paid off, take the amount you were putting towards that debt and apply it to the next smallest debt, while continuing to make minimum payments on other debts.


Step 3: Repeat the process, "snowballing" your payments into larger amounts as you progress through each debt. As you pay off one debt after another, you will gain momentum, much like a snowball rolling downhill, becoming bigger and faster with each victory.

While the debt snowball method disregards interest rates, it is grounded in the understanding that personal finance is 80% behavior and 20% head knowledge. Even though the "debt avalanche" method, which focuses on paying off debts with the highest interest rates first, may seem more logical mathematically, it often lacks the psychological motivation needed to stay on track.


By beginning with the smallest debt, you experience immediate wins, which ignite a sense of accomplishment and motivate you to keep going. This psychological boost is vital to maintaining momentum throughout the debt repayment journey.

When implementing the debt snowball method, it is essential to include all your nonmortgage debts. This encompasses a wide range of liabilities, such as student loans, medical bills, car loans, credit card balances, home equity loans, personal loans, and payday loans. However, it's important to note that mortgage debt will be addressed later in the process, after all nonmortgage debts are settled, and an emergency fund of 3–6 months of expenses is established.


To embark on your debt snowball journey, it is recommended to start after completing saving a $1,000 starter emergency fund. This fund acts as a safety net for unexpected expenses, allowing you to focus on aggressively paying off your debts.


Are you ready to embark on your path to debt freedom? With the debt snowball method, you can gain control over your finances, eliminate debt, and pave the way for a brighter financial future.


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