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Debt Snowball Method: How it Works + Calculator App & Spreadsheet

Elizabeth Johnson

Financial Advisor
Updated: 07/2019

Debt Snowball

The Debt Snowball Process

If you’ve accumulated a lot of debt, you’re probably constantly on the look-out for effective ways to start paying it off. It can be hard to get headed in the right direction if you’re already deep in a debt trap. After the financial crisis of 2007, families in America began to accumulate debt because of reductions in income. In order to stay afloat, many families had to borrow money or accumulate credit card debt. Over a decade later, this is having serious consequences.

There are several money managers that have developed techniques to begin the path to financial recovery. One of the most popular methods is the debt snowball method. The method has been created by popular financial guru Dave Ramsey. He believes the method is a good tool for people who have problems alleviating their debt issues.

The method has been developed for people who have a bad time getting motivated to pay off large debts. It’s intended to work for people who have multiple debts – most of these debts are typically credit cards, but also include other loans and lending products.

In this article, we’re going to take a look at the Dave Ramsey debt snowball method to help you understand if it’s the right approach for you. Make sure to read all the information in the article before making any decisions – you need to be certain it’s the right method for you before you begin the process.


Debt Snowball Method

So, what is the debt snowball method? It’s a debt repayment method that was made popular by Dave Ramsey – a famous financial guru. The method is intended to get people motivated to repay their debts. Instead of paying off larger sums first, the debt snowball method instructs you to pay off smaller debts first, and then to snowball the minimum repayments from past debts into paying off the larger ones.

The method is all about building momentum – this is why it has been coined the debt snowball method. Dave Ramsey believes that many people have problems paying off debt because they have the wrong mindset. By using the debt snowball method, you’re creating a system in which you have a workable structure for paying off your debt. Below we will explore each of the debt snowball method steps in greater detail. Make sure you read through all of them so you know exactly what you’re doing!

The Debt Snowball Method Steps

Dave Ramsey has outlined specific steps to the debt snowball process. We’ve taken a look at these steps and created a set of our own, abbreviated steps. If you want to know the entire process, he has many writings on the subject that go into exact details. This being said, all the concepts you need to know are covered in our steps outlined below.

Step 1 – Outline Your Debts

The first step you need to take is to list out all the debts you currently owe. You should do this in ascending order – the lowest debts should be at the top of your list. It’s important to list out the lowest balances that you have, these debts will end up being prioritized first.

Step 2 – Determine Your Amounts

After you list out all your debts and minimum payments, it’s time to assess how much you can afford to pay back. Add up all the minimum payments you have each month, and then determine the amount of expendable income you have on top of this to begin paying back your debts. You need to be certain to continue to meet AT LEAST your minimum payments, or you will default.

To escape your debt trap, you’ll also need extra cash to begin paying back these debts. So, it’s important to begin to budget for it.

Step 3 – Begin Paying Your Smallest Debts

Once you’ve determined the amount of money that you have to pay off your debts, begin making your monthly minimum payments, and use the extra money you’ve budgeted to pay off your SMALLEST debt. Remember — smallest debts are paid off FIRST.

Step 4 – Use Old Payments Towards New Debts

Once you have paid off a debt, you should begin using your budgeted repayment amount PLUS the minimum payment amount from the past debt to pay off your next smallest debt. This will mean your next debt is paid off using larger amounts because you are using the past minimum payment amount on top of your budgeted repayment amount.

Step 5 – Continue Process Until You Become Debt Free

You then continue to do this with each debt you have until you are debt free. Remember, you always pay off smaller debts first – you will be progressing towards larger debts as you pay off the smaller ones. In addition, because you are using all the minimum payments of the past debts, you will eventually be making large payments on your bigger debts. That’s why it’s called the snowball method!

Who is Dave Ramsey?

Dave Ramsey is a famous financial author and advisor that has a large following in the United States. He’s written many successful financial advice books and also has an online presence that he uses to communicate with his readers. Dave Ramsey also gives speeches and talks at various locations. He has developed several methods for wealth building and debt reduction – he has a loyal fan base.

While Dave Ramsey has hundreds of thousands of followers, he’s not without his critics. There have been several high-profile money managers that have spoken out about his techniques. They believe that some of his methods don’t lead to the results they claim – and that some of Dave Ramsey’s own claims are exaggerated. This being said, many people have found success with his money management advice – it depends on the individual. We will highlight some of the debt snowball disadvantages later in this article.


Debt Snowball Spreadsheet

As mentioned previously, it’s important to stay organized if you do undertake the debt snowball technique. The entire point of the process is to provide a workable structure that you can use to alleviate your debt as effectively as possible. For this reason, using a debt snowball spreadsheet to track your debts, payments, and progress is often a very effective way of getting started.

You can find a free debt snowball spreadsheet here. Using an existing template will save you time, effort, and money. If you don’t like the spreadsheet we’ve provided, there are plenty of free and for-money options available on the internet – just give it a Google! You can also find a debt snowball app if you search Google – there are actually tons of debt snowball apps available in multiple variations.


Debt Snowball Calculator

If you’re looking for a snowball debt elimination calculator, there are a few online. The snowball debt calculator we suggest is provided by the website ‘What’s the Cost’. You can find it here. There are also plenty of other calculators available if you want to search for your own. The good thing about the calculator we suggest is that it allows you to order your debts in terms of interest or balance, which allows for added customization.

A debt calculator can give you a much clearer idea of when you will become debt free. This is a nice bonus for people who want to get a better idea of what the cost and timeline of the snowball debt payoff plan will be. If you're looking for a debt consolidation loan calculator then that's different.


Benefits of Debt Snowball Method

So, you may have heard lots about the debt snowball method, but what are the exact benefits? When you’re going to make a financial decision, it’s important to have a concise list of the benefits and disadvantages of the decision your making. Paying off your debt is a big decision, and it will have a massive impact on your life moving forward. If you want to be effective at paying off your debt, you need to care about the process.

Many of the benefits surrounding the debt snowball method are based around the psychology of the individual paying back the debt. The method is designed to help people who have struggled to remain consistent in paying off their debt. Below are the benefits of using the debt snowball method to pay off your debt:

  • Structure – The primary benefit of the snowball method is that it provides a set structure for the debt payer. It means you can begin to approach your debt problem with a specific formula in mind. Using spreadsheets and other additional tools can also help add to this structure. If you’ve found that you haven’t had a set structure for paying off your debt in the past, the debt snowball method may be able to help this.
  • Motivation – As mentioned previously, the large benefits of the debt snowball method are based in psychology. The debt snowball method provides you with additional motivation to start working through your debt. Having a specific method and plan in mind can do wonders for the human brain – especially when you know this method has worked for countless other people who have been in the exact same situation. Motivation is the key to building your financial future!
  • Momentum – Another psychological difference that is said to be improved by the debt snowball plan is momentum. When you begin paying your smaller debts, you’ll see real change in your financial status. This will allow you to progress forward without having to worry about smaller debt issues. As you continue to pay off smaller debts, you will grow your financial power and increase your momentum. For this reason, the debt snowball plan is considered a great tool for helping you build the momentum you need to improve your financial status – don’t underestimate how powerful it can be if used correctly.
  • Free – The other great benefit is that the debt snowball plan is completely free of charge. Many debt relief solutions will require you to take out new loans or pay people to advise you on solutions. You may not be able to afford these methods, and they may not be as successful at helping your situation. Using a free solution that has plenty of free resources means that you’ll be able to take your debt relief to the next level without paying out of pocket.

Key Disadvantages

There are a few financial advisors that advise against the debt snowball method. This is because the debt snowball method does not factor interest rates into the payment schedules. The only thing that matters in the debt snowball method is the size of the debt – you pay off smaller debts first. In reality, many financial advisors believe you should pay off the debt with the largest interest rates first – it is these debts that are costing you the most. Below we will outline the major disadvantages or criticisms of the snowball method.

  • May Not Be Quicker – If you have high-interest debts with large balances, it may be quicker to pay those off and stop accumulating interest on them before you move to the lower value debts. For this reason, if you’re disciplined, paying off high-interest debts may be a better choice.
  • May Be Costlier – Paying off your low balance, low-interest debts may also be costlier. The more interest you accumulate on your higher interest debt, the more that you will pay as you continue to pay down your debt. This can end up being thousands of dollars depending on the current sizes of your debts.


If you’ve had a look at the advantages and disadvantages of the snowball method and you don’t think it’s the right method for you, it might be time to consider some other methods when trying to decide how to pay down your debt. Remember, the debt snowball method is designed for people who have a problem with paying down debt. Alternatives should only be used by people who believe they have the resolve to use them effectively. Below are some popular alternatives to the debt snowball method.

Higher Interest First

As mentioned previously, ‘higher interest first’ payments can mean you spend less time repaying your debt at a lower cost. For the disciplined debtor, this is the best way to approach the process, as it can mean you save money over the long-term. This being said, if you’ve had problems paying your debt down using this method in the past, you may continue to do so. Remember, the debt snowball method is best for people who need a psychological boost paying down their debts. You don’t want to end up where you started.

Consolidation and Refinance

Another popular way to begin the debt repayment process is to consolidate and refinance your debt. Many people will take out loans at low interest rates and then use these loans to pay down their debts. This method is attractive because it also consolidates all your payments into a single payment. It also allows you to save a considerable amount of money because many personal loans have significantly lower interest rates than credit card or line of credit interest rates.

The only downside to this method is that many people may not be able to get access to these types of loans. If you already have a lot of different credit card or loan balances, your credit score may be quite low at the moment. This means that you might not be eligible for financing, or you may find that lenders only offer you extremely high interest rates.

Either way, it’s important to make sure that you are eligible for financing if you use this method. Check the lender requirements before you apply for any loans, and also make sure to be aware of your own credit score. Applying for loans can damage your credit score, which means you may cause further problems for your financial health – this is why you must be certain you have a good chance of approval prior to consolidation. Take a look at the best debt consolidation company reviews.


Things to Keep in Mind

If you are going to use the snowball debt plan, there are some other important things to keep in mind. The debt snowball payoff method is best for people who need to add structure to their payments. If you want to get the most out of the debt reduction snowball method, make sure to remember the two tips below:

Stay Disciplined

When you first start the snowball debt method, you will organize all your current balances in ascending order. You will also budget out how much your monthly payments are, and how much extra you can afford to pay towards your debt. It’s important to be honest with yourself during this process about what you can afford – don’t overshoot your limits.

The reason it’s important is because it’s vital that you remain consistent and disciplined if you want to pay off your debt in a timely manner. It’s also important because you need to build self-belief and momentum if you want to be successful at paying off your debt. You need to promise to yourself that you won’t veer away from your budget. If you do, you’ll find the method doesn’t work as well, and may even end up costing you money. Stay committed to escaping your debt trap!

Don’t Repeat Same Problems

As with any debt escape strategy, it’s important to create an all-encompassing strategy that consists of various different components. You don’t want to escape debt, and then find yourself in a position where you are accumulating debt again. If you do, you may find that you end up in the exact same position.

Ridding yourself of debt should be seen as an opportunity to progress financially in life. It’s impossible to continue your financial growth if you’re carrying large amounts of debt. Being debt free means you will stop spending money on worthless interest payments and related costs. You’ll be able to take advantage of financial opportunities that you may not have had access to before. In addition, the stress levels in your life will be greatly reduced – a great benefit for someone who has been in a chronic debt situation for years on end.



After reading this article, you should have a pretty good idea if the debt snowball method is right for you. The great thing about the method is that it is completely free of charge – you don’t have to sign up for any programs or pay consultants to help you out. On the other hand, this means that your fate is in your own hands – you’ll need to be disciplined if you want it to work. The less you take it seriously, the higher chance you have of failing.

It’s important to assess why the debt snowball method is successful – this is key in determining if it is the right method for your particular situation. If you’re someone who finds it hard to pay back debt because you’re constantly finding yourself in the same situations, the debt snowball method may provide you with the extra motivation you need to get started in the right direction. There have been studies that have shown the positive effects that the method has on the human psyche.

A lot of debt problems are down to the psychological problems that prevent people from making headway with their debt problems. The debt snowball effect aims to provide a way to retrain yourself to make progress. As you pay off each of your smaller debts, you will grow confidence in your ability to continue making decisions to help you progress further with your debt resolution.

Remember, you will only ever escape high-interest debt if you’re committed to doing so. Thousands of people continue to make the same mistakes and end up back in square one. If you want additional resources on debt reduction and potential methods that can help you, check out some of the other content on our site. We’re committed to helping our readers find the best possible solutions for the their particular debt problems – every debt problem is different!


Paying off debts is a herculean task and debtors are always at a loss on the best method to use. Debt consolidation is useful but debt snowball is perhaps a faster route to being free of debts.

We have made a list of recurrent questions on debt snowball and answers that will help you clear off your debts using the debt snowball method.

Basics – Understanding Debt Snowball

Debtors are familiar with debt consolidation as a method of clearing off debts. They are however not conversant with the concept behind debt snowball. This section covers all you need to know about debt snowball and how it works.

What is the debt snowball?
The debt snowball is a debt pay-off strategy that demands the pay-off of smaller debts and at the same time, paying some amounts for other debts in the debtor’s account. When the smaller debt had been paid off, the debtor can then start paying off the higher debts.
Does debt snowball really work?
Debt snowball works amazingly well because debts will be paid off in bits until they are fully settled. Starting with smaller debts and using the minimum equivalent in smaller debts for other debts is a faster way of getting out of debt.
How long to pay-off debt using snowball?
Paying off debt will be faster with snowball because you have your eye on the bigger debt while paying off smaller ones.
What does snowball mean in debt payoff?
Snowball in debt payoff simply means a debt reduction strategy that allows you to pay off debts quickly. It is often compared with the avalanche method. Debt snowball, however, has to do with paying off smaller debts before moving over to debts with higher amounts.
What is the cost of debt snowball?
Debt snowball costs more money but it helps you in being free from debt in a short time. Using the debt snowball method, a debtor can put more money into smaller debts and when that is paid off, he continues with others until they are all paid off.

Debt Snowball Computation

If you’re at a loss on how best to compute your debts using debt snowball, this section contains answers that will help you use the debt snowball effectively.

How do I calculate my Snowball Debt?

There are online software and snowball calculators that help in calculating debts and how to pay these debts off using the debt snowball method.

What is the snowball effect in debt reduction?

Snowball has positive input in paying off debts. The strategy suggests paying off smaller debts and at the same time, making payments to other debts. Smaller debts will get extra amounts; making their payoff faster and helping the debtor payoff other debts as quickly as possible.

How do you do a snowball debt?

Before paying off your debts using debt snowball, make a list of your debts starting from the lowest to the highest. You then have to make minimum payments to the debts and throw much money into the smallest debts.

How to make a debt snowball chart?

Debt snowball chart contains a list of your debts and their interest rates. You can create the chart by tabulating your debt and their interest rates in the first column. In the next column, include the total amount owed per debt and the minimum amount to pay for each debt.

How to make a debt snowball spreadsheet?

The debt snowball spreadsheet is an effective way of keeping track of your debt pay-off while moving from the smallest debt to higher ones.

To make a debt snowball spreadsheet, divide the column into small and large debts. Compute debts with less interest rate and total pay-off amount into the small debt section and the higher interest rate debts into the large debts section.

This helps you monitor your pay-off progress and from this, you’ll get insight into how long it will take you to offset all debts.

Which debt should I pay off first?

Start with paying off debts with higher interest rates. These are considered bad debts and can ruin your credit score if left for long. Some people use consolidation loans to pay these off. One such company that can do this is National Debt Relief. Read more about National Debt Relief pros and cons.

What is the snowball effect?

Snowball effect is a rapid increase in size and also propels other actions to come on when the earlier action had been completed. Snowball effect also entails movement from a smaller state to another state of higher significance.

What is the snowball sampling method?

Snowball sampling method is a non-random sampling technique that is used when solutions are hard to locate.

How to organize debt snowball?

Debt snowball can be organized in ascending order (smallest to highest) using a table. There are also options of using a spreadsheet and excel in computing debts that will be paid off using the debt snowball method.

What is the debt snowball plan?

Debt snowball plan is charting your debts in ascending order; starting from smaller debts to higher debts. The plan gives insight to interest rates on each debt and the debtor will have to start with debts of lowest interest rates and work it up to higher interest rate debts.

How to snowball debts effectively?

A better way to make the best out of your debt snowball plan is making a list of all your debts. You can then choose smaller ones with low interest rates as the first to be paid off. This leaves more room to save funds for debts with higher interest rates.

How to handle debt snowball in YNAB

You Need a Budget (YNAB) has provisions that let you compute your debts and the minimum amount to pay on them. You can easily handle your debts on YNAB with available software such as the online snowball calculator that allows you to determine how much to pay on each of your debts.

How to trace snowballing debt pay-off?

You can use a spreadsheet to keep track of how long it will pay off your debts. There will be a tabulation of your debts and each debt that had been paid off has to be marked off; giving you a clearer view of remaining debts.

Should I pay interest during debt snowball?

Interests are not to be paid during debt snowball because you’re paying off each debt at a time.

What is the first debt in your debt snowball?

The first debt is usually debts with low balances. This means that debts that have low interest rates should come first while debts of higher interest rates are to be paid off later.

How to snowball credit card debt?

Snowball debt reduction strategy is also useful in credit card debts. Figure out your credit card debts and the interest rate for each. Then figure out how much you will pay for each and use the order format (paying off small debts first) to clear your credit card debt. There are also debt consolidation credit card programs you can look into that may make all this a bit easier.

Alternatives to Debt Snowball

If you find debt snowball a hard method in paying off debts, you can look out for other solutions to pay off your debts. In this section, you will discover other methods you can use in paying off your debts.

Is Debt Snowball the best?

Debt Snowball is one of the best options of paying off debt. Debt Snowball allows you to pay off all debts and use the same amount in smaller debts in paying off higher debts. However the best debt consolidation programs still have their uses if you're finding this all too difficult to do on your own.

How can I pay to get out of debt fast?

You can get a clean financial bill by using the snowball method in paying off smaller debts first before going over to the bigger ones. Read more about how to get out of debt.

What is the debt avalanche?

Debt avalanche is an accelerated method of paying off your debt. You are to plow much money to debts with higher interest rates and make minimum payments to others.

What is the Avalanche Method?

The Avalanche Method is another way round in paying off debt. It is similar to debt snowball but the only difference is that you pay off debts with higher interest rates then proceed down to smaller debts.

What is Dave Ramsey’s debt snowball method?

Dave Ramsey’s debt snowball method is a method of reducing debt. The strategy specifies that a debtor with multiple debt accounts should start off with smaller debts and making minimum payments used in small debts on larger debts.

What is paycheck garnishment?

Paycheck garnishment is forfeiture of some part of your income such as salary and wage after a court order had been granted to that effect. This is usually done in extreme cases where a debtor had not been able to pay-off debt.

The creditor then obtains a court order that directs the debtor’s employer to pay a certain amount from the debtor’s income to the creditor until the debt is paid off. A debt relief program can usually help you avoid this scenario.

How do I pay off debt if I live paycheck to paycheck?

Cut down your financial expenses and save funds. These funds should be used in paying off your debts. When paying off, you can start with debts of higher interest rates.

How can I pay off debt quickly and save money?

There are many options to get out of debt. Paying off debt using snowball method is one of such ways and this allows you to pay off small debts first before working your way to the bigger ones.

How can I be debt free?

Make a list of your debts and their interest rates then workout a debt pay-off plan. You can also make a credit card balance transfer, sell off items or take up a side job to increase funds for your debt pay-off.

How can I get out of debt with bad credit?

Cutting off unnecessary expenses is a good method of paying off debts with bad credits. There is also the option of consolidating debts by obtaining loans at low interest rates to pay-off debts with higher interest rates.

Debt Snowball Calculation

Before paying off debts using the debt snowball method, you have to make a list and come up with your debts in sequential order. In addition, you have to calculate the amount owed and chart a way to pay them off.

This section covers all you need to know about making calculations in debt snowball and the tools that will help you do so. You will also find out how to calculate debt snowball based on the amount of each debt and the tools and platforms that will help you make accurate calculations.

How to calculate snowball debt reduction?

Using a debt reduction calculator is a better way to calculate snowball debt reduction. To calculate, type-in the amount owed and the annual interest rate of the debt. After this, key-in your monthly income. The calculator then shows you much can be saved for your snowball debt.

How to debt snowball student loans?

Though debt snowball is not entirely a faster way of paying off debts, it is highly effective for students that want to pay off their loans. Student loans can be paid off starting from the lowest amount owed.

To debt snowball student loans, rank your loans from small to the highest balance. Then make minimum payments to each debt but add more funds to smaller debts.

How to snowball debt according to balance?

Debts can be snowballed according to their balance by paying minimum amounts to each debt. Additional funds can then be used on debts with small balances.

How much should go towards debt snowball?

There is no specific amount to be used for debt snowball. However, make a computation of all debts and their payoff costs. From this, you can make a mental note of the sum in making minimum payments for each debt.

What is the excel formula for debt snowball?

Working out your debt payoff using excel is quite simple. The formula is tabulating your debts from small to highest. Their payoff sums and interest rates should be included in addition to minimum amounts you want to make on each debt.

Why is debt snowball in the savings category?

The debt snowball is in the savings category because it allows debtors to have extra funds for their financial needs while helping them pay off their debts on time.

How to snowball debt according to interest rate?

Organizing snowball debts according to interest rate is very easy. Tabulate your debts from the smallest to highest. From this list, you can then select the debt with smaller payoff and throw many funds to it and also make minimum payments to other debts in the list.

What is the best debt snowball app?

Cutting down spending habit to offset debts and working out your debt figures with pen and paper isn’t always a better solution. There are mobile applications that help you manage your debts.

There are many of these such as debt manager and tracker, my debts, debt payoff assistant and debt tracker. You can choose the one that is suitable for your debt payoff needs.

How does debt snowball work when you are behind on payments?

When you are behind on making payments for your debts, simply snowball available funds and pay off smaller debts. This is an effective way of climbing the ladder to your debt freedom. With this, you are paying off entire loans (usually smaller debts) while working at paying off higher ones.

Debt Snowball Payment

After you must have computed and calculated your debts, you then proceed to make payments. In this section, you will discover how to pay off debt fast using the debt snowball method.

How to do debt snowball with no extra income?

You can pay off debts with the snowballing method without additional income. All you have to do is avoid bank overdrafts and avoid making late payments. You can also make a budget for your financial expenses and avoid going beyond the stated figure.

How to make snowball debt with your actual income?

A debt snowball calculator allows you to work out your snowball debt with your income. You will have to fill your account balance and the total amount owed. Then specify the minimum amount you want to pay.

The calculator then shows how much can be deducted from your income to pay off your debt. With this method, you won’t have to seek more funds but work with your income.

How to debt snowball on MyFedLoan?

Fedloan allows debt snowball as debt payoff. To use this, you have to log in to your account on the site (or create one if you haven’t) and move over to the payments and billing options. Select the specific loan payment amounts; fill in the necessary options make your payment.

The amount you paid in will be used in paying off your smallest debt and remnants rolled over to next debts.

How to use mint for the debt snowball?

Mint is an online budget site that allows you to use available tools in calculating your debt payoff plans. The new tool made available on the site allows you to log your credit card detail and there is also instruction to fill interest rates and minimum toe of each debt.

After this, the duration for the repayment using the debt snowball method will be shown. There is also an option of checking the duration if you pay more for each debt.

Elizabeth Johnson

Elizabeth is an expert on Debt Consolidation as she provides helpful advice to people who are dealing with debt problems. She graduated college with a BS in Finance. After college, she took a job working at a non-profit debt counseling program. It was at this position where Elizabeth honed her expertise for helping people understand how different financial products work and finding ways to help people pay off their debts.