Not only does it sound a little lighter than the avalanche method – it is. If you’re looking for a simple, motivating way to pay off personal debt, the snowball method is it. It’s all about building momentum by tackling your smallest debts first, then working your way up.
Here’s how it works, why it helps, and how to decide if it’s right for you.
What is the debt snowball method?
The snowball method focuses on clearing your debts from smallest to largest, regardless of interest rate. You make minimum payments on everything, and put any extra money towards the smallest balance first.
Once that’s paid off you move to the next smallest, and so on. As the ‘snowball’ rolls, your confidence builds, and your debt shrinks. The biggest sell of the snowball method is that by tackling the smallest debts first, you get some quick wins under your belt and momentum in your back pocket to tackle the rest.
What are the 4 steps in the debt snowball method?
- List your debts from smallest to largest: Forget the interest rates and focus on the balance.
- Keep making minimum payments on all debts: This keeps your accounts in good standing.
- Throw any spare cash at the smallest debt: Seriously, every little helps you reach that first win.
- Once it’s paid off, move to the next: Repeat the process until all debts are cleared.
Does the snowball debt method really work?
Yes. Especially if you are in desperate need of some motivation. A 2016 Harvard Business Review experiment found that participants using the snowball method paid off total balances 15% faster than those using the avalanche method. Something to note though, is that this is a measure of completion, and not cost. The avalanche method will undoubtedly mean you pay less interest.
Snowball vs avalanche
Snowball focuses on behaviour. It’s great if you want quick wins to stay motivated, and a higher likelihood of following through.
Avalanche focuses on maths. It saves more money in the long run by clearing high-interest debts first, but you don’t see wins as fast.
The decision is yours to make. If you’re driven by seeing results fast, snowball could be the better fit. If you’re more numbers-focused, avalanche might be a smarter choice.
Snowball method example
Let’s say you owe:
- £300 on a store card
- £1200 on a credit card
- £2500 on a personal loan
You’d pay off the store card first, then put that payment towards the credit card, and finally the loan. Each time you clear a balance, your available repayment budget grows – and so does your progress.
Ready to roll with it?
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