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What is the snowball strategy? A super simple approach to debt 

What we'll cover

  • What the snowball strategy for debt reduction is

  • The advantages and disadvantages of this approach

  • Why it might work for you

When you have debt, just thinking about it can cause your pulse to race. If you feel bogged down by multiple sources of debt, know you’re not alone and that paying down debt (while overwhelming) is possible. With the snowball approach to debt management, you can take the first step toward debt elimination with confidence. 

What is the debt snowball strategy? 

This approach to getting out of debt starts with paying off your smallest balance first. Once that debt is paid off, you roll the amount you had been paying toward that debt to your next smallest debt and so on. (Picture a snowball gathering mass and speed as it rolls down a hill.) 

The principle of small wins adding up to big success is what fuels this simple and highly effective strategy. Each incremental victory builds momentum, giving you the confidence and optimism to keep pushing forward.

Using the debt snowball strategy

Debt can feel overwhelming, but it doesn’t have to weigh you down. The snowball approach breaks debt reduction down into an actionable, manageable step-by-step process. 

If you feel stuck and don’t know where to begin, the snowball strategy gets the ball rolling.

First, list your debts according to the outstanding balance, smallest to largest. With the snowball strategy, you don’t take interest rates into consideration when making your list. Pay as much as you can on your smallest debt while continuing to make minimum payments on the others. Once your smallest debt is paid off, you’ll dedicate those funds to the next smallest. Keep repeating the process until all your debts are paid in full.

The debt snowball in action

To get a clearer picture, consider this example. Let’s say you have a balance of $7,000 on one credit card, $2,000 on another credit card, $10,000 in student loan debt and $5,000 in medical debt. With the snowball approach, you pay these debts in the following order from smallest to highest balance: 

  • $2,000 credit card

  • $5,000 medical debt 

  • $7,000 credit card

  • $10,000 student loan

In this case, you would continue making minimum payments toward each debt and allocate any additional budget toward the $2,000 credit card (even though this might mean paying off a debt with a lower interest rate first). 

Advantages and disadvantages of the debt snowball strategy

When it comes to getting started on reducing your debt, you have a lot of options . Each strategy comes with its benefits and drawbacks. The snowball strategy can be effective, but it’s not for everyone. Looking at its distinct advantages and disadvantages can help you decide if it might be the right fit. 

One notable advantage of the snowball approach is the psychological component. If you feel stuck and don’t know where to begin, this strategy gets the ball rolling (pun intended). By starting with your smallest debt, you’ll get a win upfront. This sense of accomplishment is what drives the snowball strategy and can make it a great fit for those struggling to get their debt repayment in motion. 

These faster, small victories can help motivate you to stick to the plan. Think of it like cleaning out a messy closet. If you wait until you can do it all at once, you might get frustrated and write off the task entirely. But if you start by organizing the least cluttered shelf, you’ll see progress and stay dedicated to your action plan. 

From a purely mathematical standpoint, the snowball strategy may not seem like the “best” approach because it doesn’t focus on paying off higher interest debt first. Other ways of coming at debt reduction — such as the avalanche strategy — are geared toward minimizing total interest paid, which means you could spend less money paying off your debt in the end. 

Start small with the snowball strategy for big success

Dealing with debt can feel like an insurmountable challenge. But paying it down can be done. The easy-to-use, momentum-building snowball strategy is one way to give you the push you need to get started. Let one small victory invigorate you to take on your next financial goal. 

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