Debt Consolidation Debt Help

How to Snowball Your Debt the Right Way

Beth Trach
Written by Beth Trach

Paying down your debt is hard. When you’re up to your eyeballs in bills, it can be completely demoralizing to think about paying off a loan or trying to save any extra money for the future. Where should you even start when it comes to choosing which debt to tackle first?

This is where the concept of snowballing your debt comes in. If you haven’t heard of it, the debt snowball method is a way to pay down your bills that lets you focus on just one debt at a time. — typically the smallest one. To make it happen, you pay the minimum on all your debts except one, at which you throw all the spare cash you can to get ahead of the game. When that first debt is paid off, you take the monthly payment you had been spending to get rid of it and apply it — plus any extra money you can manage — to the next bill.

Rinse and repeat until you have paid off all your debt.

The main advantage of this system is that it keeps you organized because you can focus your efforts on one debt at a time instead of trying to spread your money over all of them or sticking to a complicated rotating scheme of payments. It’s also really good for morale to get rid of an easy, small debt first — and then you automatically have some extra money to put towards another bill, all without a major budget cut or picking up a side gig.

But does this method make the most financial sense? Or would you be better off starting with your biggest debt instead? How does the interest rate factor in?

Time to crunch the numbers.

About the author

Beth Trach

Beth Trach

Elizabeth Trach is a writer and editor living in Newburyport, MA. She also sings in a band, grows almost all her own food, and occasionally even cooks it. You can catch up on all her adventures in frugal living and extreme gardening at Port Potager.

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