How to Use the Debt Snowball Method to Pay Off Debt Fast + FREE Calculator

It is possible to get out of debt if you have a plan and stay focused. It will require a commitment, but I know you can do it! Today I’m going to show you how to use the Debt Snowball Method to pay off debt.

To me, being in debt is the same as being in bondage. You are going to work today to pay for yesterday’s bills. You are never really free until all of your debts have a zero balance. And by debt, I mean credit cards, student loans, auto loans, personal loans, collection accounts, medical bills, and money you may owe to friends and/or family.

How to Set Up the Debt Snowball Method to Pay Off Debt

• Gather up all of your bills (excluding your mortgage) and list them on paper. Create four columns and include the name of the account, the interest rate, the balance, and the minimum payment.
• Now arrange your bills in order from the smallest to the largest balance. You may have heard or read that you should pay off the highest interest-rate accounts first, but I believe that you will stick with the plan if you can pay off the smaller accounts first. You’ll get excited when you see the smaller accounts being paid off, and you’ll be motivated to pay off the larger ones.
• Pay only the minimum payments on each account. However, try to find extra money to apply to the account with the smallest balance. This will help speed up the payoff date for that account. Consider cutting back on some expenses to give you more money to apply to this balance. Because it’s a small balance, it should be paid off quickly.
• Once that first account is paid off, all of the money you were using to pay toward that account goes to the next account on the list. Continue paying the minimums on the other accounts.
• When the second account is paid off, use all of the money from the previous two accounts to pay off the next bill and so on.

This is called the Debt Snowball Method because the amounts you use to pay off each account keep getting larger because you are rolling the money from one account to the next-think of a snowball rolling down a hill.

Here’s an Example of How it Works

Let’s assume you have four accounts.

• Bill #1 has a balance of $500-min payment of $50
• Bill #2 has a balance of $750-min payment of $75
• Bill #3 has a balance of $1,000-min payment of $100
• Bill #4 has a balance of $1,500-min payment of $150.

You start off by paying the minimum payments on all accounts. Let’s say you found an additional $100 per month to apply to bill #1, so you are paying bill #1 $150 per month.

Once bill #1 is paid off, apply the $150 to bill #2. You will now pay bill #2 $225 per month ($150 from bill #1 + the min payment of $75 for bill # 2) until bill #2 is paid off. Continue paying the minimum payment on bills #3 and 4.

When bill #2 is paid off, apply $225 to bill #3. Now you are paying bill #3 $325 per month ($225 that was paid to bill #2 + the min payment of $100 for bill # 3) until it is paid off. Continue paying the minimum payment on bill #4.

Once bill #3 is paid off, apply $325 to bill #4. You will pay bill #4 $475 per month ($325 that was paid to bill #3 + min payment of $150 for bill #4) until it is paid off. Everything is now paid in full! 🙂

If you’re ready to get started, download this FREE debt reduction calculator. The calculator allows you to track 10 creditors for free, but you can purchase the extended version if you need to pay off more than 10 accounts.

That’s It!

As you can see, the payments to each debt grow larger as other accounts are paid off. This helps speed up the date of becoming debt-free. The key is to stay focused and committed to using the extra money to snowball the debt payments.

If you come into extra money while applying the Debt Snowball method, apply the extra money to the debt and watch it pay off even sooner.

It definitely takes patience and perseverance to get out of debt, but I am sure you can do it. Imagine how free you will feel, knowing that you don’t owe these companies any more of your hard-earned money!

My hope is that this information will inspire you to create your own get-out-of-debt plan, so you can be on the path to financial freedom. Don’t forget to download the FREE debt reduction calculator to help you stay motivated and on track!

Have you heard of the Debt Snowball Method before? Have you used this method to pay off debt? What was the most challenging?

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