What is the debt snowball method?
List your debts from smallest balance to largest, ignoring interest rates. Pay the minimum on all of them and put every extra dollar on the smallest. When it’s gone, add its payment to the next one. Each payoff frees up more money, so the payment rolls forward and grows like a snowball.
The method was popularized by Dave Ramsey. Its appeal is psychological: small debts disappear within months, and those early wins make it easier to keep going.
“I owe $30,150 across a store card, a medical bill, a credit card, a car loan and a student loan, and can pay $200 a month above the minimums. When am I debt-free?”
In 3 years 6 months, paying $4,282 of interest instead of $9,774 on minimums alone. The store card is gone in month 3. Try this scenario
How does the snowball grow?
Every debt you clear adds its minimum to the payment on the next. In the example above, the extra $200 goes to the store card, $230 a month in all. Then $280 goes to the medical bill, $400 to the credit card, $660 to the car loan and finally $820 a month to the student loan.
The “Snowball payment” column in the results shows that amount for each debt, and the month-by-month plan shows what to pay on every debt each month. Raise the extra payment and the whole timeline shortens.
“Same debts, but I can find $500 a month extra.”
Debt-free in 2 years 6 months, a year sooner, with $2,835 of interest. Try this scenario
Debt snowball vs. avalanche: which is better?
The avalanche pays the highest interest rate first instead of the smallest balance, so it always costs the same or less interest. In the example, the avalanche saves $217 and finishes in the same month. The snowball trades that for faster early wins: two debts gone in seven months.
Research supports the trade. In a study of consumer debt settlement, people who paid off individual accounts were more likely to clear all their debt, whatever the balances. If you’ll stick with either plan, the avalanche is cheaper. If motivation is the risk, the snowball is worth the extra cost. The debt payoff calculator compares both side by side.
How do I pay off $10,000 of credit card debt in 6 months?
At 22% APR, you’d need to pay about $1,775 a month: a $250 minimum plus about $1,525 extra. Stretch it to 12 months and it’s about $936 a month. Enter your debts and a debt-free goal, and the calculator works out the extra payment for your own balances.
“How much extra do I need to pay off a $10,000 card at 22% in 6 months?”
About $1,525 extra a month on top of a $250 minimum. Try this scenario
“How do I pay off $30,000 of debt in a year? Two cards, a car loan and a student loan, $730 of minimums.”
Pay about $1,936 extra a month, $2,666 in all. Try this scenario
Debt snowball FAQ
Does Dave Ramsey recommend the snowball or the avalanche?
The snowball. Ramsey’s plan lists every debt except the mortgage from smallest to largest balance, whatever the interest rate, because quick wins keep people going. The avalanche, highest rate first, costs less interest. Which works better depends on whether motivation or math is your bigger problem.
Should I include my mortgage in the debt snowball?
Usually not. Most snowball plans cover consumer debts: credit cards, medical bills, car and student loans. A mortgage is so large it would sit last for decades and hide your progress. Clear the other debts first, then use the mortgage payoff calculator to decide whether to pay it down early.
Do I keep paying the minimum on every debt?
Yes, always. Missing a minimum brings late fees, penalty rates and credit score damage that wipe out any gain. The snowball only decides where the extra goes. Every debt gets its minimum each month, and the target debt also gets the extra plus every minimum you have freed up.
Where does a 0% balance go in the snowball?
In balance order like any other, since the snowball ignores rates. Watch the promotion’s end date, though: if a 0% card would still carry a balance when the rate jumps, move it up the list or plan to clear it first. Deferred-interest store cards can charge all the back interest at once.
The month-by-month method is on the methodology page.
Sources
- David Gal and Blakeley B. McShane, “Can Small Victories Help Win the War? Evidence from Consumer Debt Management,” Journal of Marketing Research 49, no. 4 (2012).
- Consumer Financial Protection Bureau, Regulation Z (Truth in Lending), including the rules for deferred-interest promotions.