What Is The Debt Snowball Method? – FAQ

The Debt Snowball Method was a term new to me when I took the Financial Peace University.

Like a regular snowball, the Debt Snowball Method gains speed as it moves.
Like a snowball rolling in the snow, eliminating debt can start small and gain size and speed with time.

Also, this method of paying off debt was quite different from what I was used to addressing, eliminating personal debt. So in my mind, I give credit to coining the term “Debt Snowball” and creating the method for Dave Ramsey. If this is incorrect, please leave a comment below.

So What Is The Actual Debt Snowball Method Of Paying Off Debt?

When you get all your debt organized, very important in FPU‘s Baby Step #2, you list your debt from lowest balance to highest.  

The debt you owe the least is at the top of your list, and the debts you owe the highest balances are at the bottom of your list.

Once your debt list is created, you do the following:

Debt Snowball Methods Steps:

1.- Plan To Pay The Minimum Payment On All Debt.

Calculating Bills.
Plan your budget to pay minimums on all your debt bills, except one.

That is right. You first budget only minimum payments on all your debt.

2.- Target One Debt Balance With The Smallest Balance.

Focus Lowest On Lowest Debt Balance.
Focus the lowest balance of all your debt bills.

Now you work on paying off the debt with your smallest balance till that debt is completely paid off.

3.- Repeat Step 1 Till All Debt Is Paid Off.

Merry Go Round.
Keep going around, till the ride is done, and you are out of debt.

Now balance changes since the Debt Snowball doesn’t affect interest rates. If necessary, re-organize your debt list to be ordered from smallest debt balance to largest debt balance again.  

Then go to step 1, and repeat the process till all debt is eliminated.

Debt Snowball Method Notes:

This FAQ only simplifies the Debt Snowball method and the steps to complete it. However, this is only a tiny part of the Financial Peach University’s 7 Baby Steps, part of Baby Step #2. 

For this method to work, you have first to take steps to become debt-free, including stopping going into debt. Figure out what debt you owe. Calculate your living expenses. Etc. The point is that this method is only a step in the big picture of following Dave Ramsey’s Financial Peace University’s system of wealth creation.

For more information about the Financial Peach University, check out their website:   https://www.ramseysolutions.com/ramseyplus/financial-peace/

Related: What Is The Avalanche Debt Method? – FAQ

Snow Avalanche
Tom, Growing His Passive Income Generators.
Myself with an interesting Bull Sculpture.
Notice: No Lambo’s. :/
Hi I’m Tom, A Blogger And A PIG Farmer.

PIG Farmer as in I grow Passive Income Generators(PIG’s).

I’ve been playing with stocks, mutual funds, and options for decades, as well as always working on my side hustle stacks.

Unlike what you read online, I’ve yet to find a way to get rich quickly. Get Rich Quick isn’t happening for me.

My journey has been long and continues. I hope to have so many PIGs I can stop working at my current job and volunteer as a medical worker overseas. 

Still waiting, but getting there. I still am a family man, and while on this Journey of Growing PIGs.  

I wanted to share my adventures(ups and downs), hoping you will contribute with your feedback and comments.

Fun Fact: In my spare time, I am a Band-Dad!

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