The Debt Snowball Method: A Complete Guide with Free Printables (2024)

Are you wondering if the Debt Snowball Method could help you become debt free? Quick answer: YES! Here’s a complete guide onhow to use the Debt Snowball Method to pay off debt.

…or if you want to snag the free printables, here ya go (there’s another opportunity at the end of this post):

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I’m just going to get this out of the way – I’m borderline obsessed with Dave Ramsey.

But for good reason. He changed my life.

I was struggling with six figures of student loan debt. My debt was more than twice my annual starting salary. I felt like there was no way I could get myself out of this mess. I figured I would be 40 years old and still paying off my college education.

But then came Dave Ramsey and I learned about the Debt Snowball Method. This method helpedme payoff all my loans. I’m now debt-free and it feels amazing. I’ve never looked back.

Who can benefit from theDebt Snowball Method?

I truly believe that EVERYONE can become debt-free using the Debt Snowball Method.

Step 0: Buy The Total Money Makeover book by Dave Ramsey

Is Step 0 a thing? While this step is not technically part of the Debt Snowball Method, I think you should still do it: Buy Dave Ramsey’s book, The Total Money Makeover.

If you need something to get you pumped to pay off your debt, this book is a must-read. When I first got the book, I flipped through the pages only reading the personal stories that are scattered throughout the book.

Each and every story made mefeel so happy for these strangers who were in bad financial circ*mstances, butturned their lives around. After reading each story, I felt “if they can do it, so can I“. Trust me, that feeling is worth the price of the book – go buy it.

Step 1: List all your debts and prioritize them from smallest to largest balance

First, you have to list every single debt that you have. This includesthe $50 you borrowed from your friend for the concert ticketand the $50,000 student loan. Make sure you listall your debts except for your mortgage.

I recommend getting a copy of your credit report to make sure you don’t have any hidden or forgotten debts (<– ahem, I’m coming from experience here…I got surprised by a $4,000 student loan that I didn’t realize I took out my freshman year of college).

When you have your list of debts, arrangethem from smallest balance to largest balance.

Ignore the interest rates of your loans – those don’t come in to play in the Debt Snowball Method. Does this disturb any of you math nerds? As an engineer, I was very uncomfortable with this too. Don’t let that stop you.

The power of the debt snowball is that sense of accomplishment you get when you pay off your first debt. It’s that ability to snowball your minimum payment from the debt you just paid off to your next debt.It’s that building of momentum and excitement that other debt payoff methodswill never give you.

Step 2: Minimum payments + extra onyour smallest debt

During Step 2, you start paying off your debts. You need to pay the minimum payments on all your debts. However, for the smallest debt, put all your extra money towards paying down the principal balance.

Don’t have extra money? Find ways to save on your every day items, pick up a second job or start a side-hustle…do anything you can to pay off the smallest debt as quickly as possible. Before you know it, your smallest debt will be paid off!

During Step 2, this is what the example looks like:

Debt Priority 1: Credit carddebt (balance: $3,537, minimum payment $45/month) – pay minimum payment + any extra money you have
Debt Priority 2: Student loan #1 (balance: $9,058, minimum payment $106/month) – pay minimum payment
Debt Priority 3: Car loan (balance: $19,102, minimum payment $350/month) – pay minimum payment
Debt Priority 4: Student loan #2 (balance: $23,433, minimum payment 246/month) – pay minimum payment

Step 3: Start paying off your second smallest debt

Once your smallest debt is paid off, start paying off your second smallest debt.

Since you no longer have to pay anything towards your smallest debt (it’s gone!), you can add its minimum payment to the second smallest debt. You’ll also want to putany extra money towards the second smallest debt.

During Step 3, this is what the example looks like:

Debt Priority 1: Credit carddebt (balance: $3,537, minimum payment $45/month) – paynothing…this debt is gone!!
Debt Priority 2: Student loan #1 (balance: $9,058, minimum payment $106/month) – pay minimum payment + minimum payment from Debt 1 ($45/month) + any extra money you have
Debt Priority 3: Car loan (balance: $19,102, minimum payment $350/month) – pay minimum payment
Debt Priority 4: Student loan #2 (balance: $23,433, minimum payment 246/month) – pay minimum payment

Step 4: Continue the Debt Snowball until you are debt-free!

Once your first two debts are gone, start attacking your third smallest debt.

Each time you pay off a debt, you add its minimum payment to the next debt. That’s how the Debt Snowball gets its name. The minimum payments roll over and get larger just like a snowball rolls and gets larger as it picks up snow.

During Step 4, this is what the example looks like:

Debt Priority 1: Credit carddebt (balance: $3,537, minimum payment $45/month) – paynothing…this debt is gone!!
Debt Priority 2: Student loan #1 (balance: $9,058, minimum payment $106/month) – paynothing…this debt is gone!!
Debt Priority 3: Car loan (balance: $19,102, minimum payment $350/month) – pay minimum payment + minimum payment from Debt 1 ($45/month) + minimum payment from Debt 2($106/month) + any extra money you have
Debt Priority 4: Student loan #2 (balance: $23,433, minimum payment 246/month) – pay minimum payment

Continue rolling over the minimum payments until all your debts are paid off!

The Power of the Debt Snowball

Any to-do list fanatics out there? I love a good to-do list. I make one every day and sometimes will include super easy tasks on there just so I can get the satisfaction of crossing something off the list (should “take a shower” really be on anyones to do list?? hehe).

I crave that sense of accomplishment and progress as you check off each task. It builds confidence in me that I can tackle the day, and I feel motivated to go on to the next task.

Well, that’s exactly what the Snowball Method does for you. The first debt you tackle is your smallest debt and the easiest to tackle. Once you pay off your first debt, you get this incredible sense of accomplishment. The debt isgone forever and you now have one less thing you have to worry about. You feel like you are making progress. You feel ready, excited, motivated to tackle the next debt. You wouldn’t get that feeling if you were using a different method (like the Debt Avalanche Method). And to me, that is the power of the Debt Snowball.

After you pay off each debt, you get to roll the minimum payments onto the next debt. Those minimum payments add up and it feels so good to pay more and more of your debt off.

Related: 10 Mistakes I Made While Paying off Debt

Free Debt Snowball Printables!

I’ve already said this, but being debt-free feels AMAZING.I want everyone to feel this way. So I created three Debt Snowball printables to help you get there faster. If you sign up below, you’ll receive three printables over the course of three days. Here’s a look at what you’ll get.

Debt Priority printable – this helps you organize ALL your debts and prioritize them from smallest to largest balance (making step 1 easy peasy)
Debt Snowball Tracker printable – this is the perfect way to visualize your debt payoff progress! (<– And you can print as many as you want. Only 2 debts? – print 2. 16 debts? – print 16!)
Debt Snowball Payments printable– stay organized all year long by recording your debt payments (there is space to list your minimum payment, snowball payment, and remaining balance each month….for each debt!)

Did you sign up for the printables? Are you just starting out with your Debt Snowball or have you already made some progress? I’d love to hear from you!

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