What is the debt snowball?

The debt snowball is the process Dave suggests you use to pay off debt. Here’s how it works: list your debts in descending order with the smallest payoff or balance first. Do not worry about interest rates or terms unless two debts have similar payoffs. In this case, list the higher interest rate debt first.

Pay the minimum payments on all of your debts except the smallest. Put any and all money left over—after you’ve covered necessities—onto the smallest debt. Attack the smallest debt, and pay it off as quickly as possible. Once the smallest debt is clear, start making extra payments on the next smallest debt. You now have more dispensable income because you have one less debt. Just like a snowball gains momentum as it rolls downhill, you’re going to gain tons of momentum and motivation as you move further along in your debt snowball. Learn more.