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What is the Debt Snowball Method?

Want to get ahead of your debt, but not sure where to start? You're certainly not alone!

By following a debt management plan, you can make a dent in your debt, save money on interest and enjoy more financial flexibility and freedom. But what's the best debt pay-off strategy?

At Wright-Patt Credit Union (WPCU), there are several different methods we recommend for managing debt. Ultimately, the one that works best for you will depend on your lifestyle and goals. That being said, one of the most popular debt reduction strategies is called the “debt snowball method."

Let's take a closer look at this particular method and how it could help you get ahead of debt.

How does the debt snowball method work?

If you've ever made a snowball before, you know you have to start small. As you add more snow to the snowball, it gets bigger and bigger. The debt snowball method works in much the same way. The idea is that by paying off your smallest debts one by one, you will gain momentum and be able to tackle your larger debts more easily.

​Debt Snowball Method:​

  1. Make a List
    Start by listing your debts in order from the smallest to the largest balance due.
  2. Pay the Minimum
    Each month, you pay the minimum payment on all your debt accounts.
  3. Tackle Smallest Debt First​
    Apply any additional money you find in your budget towards the smallest debt on your list, and focus on that item until it's completely paid off.
  4. Get the Snowball Rolling
    After you pay off your smallest debt, shift your focus to the next smallest debt and so on, and watch as your debts snowball away!

When you start small and “get the ball rolling," it will become easier to eventually pay off all your debt! As you pay off all the smaller accounts over time, you'll free up more money in your budget to apply to the bigger accounts. 

​Is the debt snowball method right for you?

Keep in mind that what works for one ​person might not work for you. Sometimes, it takes a little trial and error to find the debt reduction strategy that's best for your unique situation.

​Here are some of the pros and cons of the debt snowball method to consider:​

Pro: Eliminating your debts one-by-one can give you a confidence boost. As you see your debts diminish, you'll be more likely to stay motivated and continue paying off your debt in the long-term.

Con: By only paying the minimum on debt accounts with large balances, you might end up paying more in interest over time. Make sure you know your loan interest rates and credit card APRs before you begin this method.

Pro: Following any structured debt payment strategy, including the debt snowball method, can help you get your finances organized and back on track. Even if you decide to try a different method later on, you'll gain a better understanding of your debts and how to manage them.

Here's a tip: Use a debt calculator to compare different debt pay-down methods based on the terms, interest rates and balances of your current loans.

Wright-Patt Credit Union is here to help you get ahead—and stay ahead—of your debt so you can achieve greater financial flexibility and freedom! Through our partnership with GreenPath Financial Wellness, our members have access to free credit counseling, budgeting and debt advice. Our certified financial counselors will work one-on-one with you to explore different strategies and develop a customized debt management plan that's right for you.

Want to get started with the Snowball method? Try starting with this free Debt Inventory worksheet to help you get a clear snapshot of where you're at. You can also find more helpful financial worksheets on our website. To learn about the basics of smart money management and keep more of your hard-earned money, visit your local Member Center, or click here to explore free financial counseling offered through our partnership with GreenPath Financial Wellness.