Have you ever wondered what the best way to pay off your debt is? On the topic of tackling debt, paying off loans and credit cards with the highest interest rate first might make the most sense mathematically. However, sometimes the mathematical solution isn’t the path that keeps us feeling like we are moving forward and motivated to continue. When changing a behavior, it can make more sense to follow a path that supports us through the challenges of changing old habits. Like a person changing their diet, it helps to see the progress being made with small steps taken that can then help influence behavior and encourage more steps towards healthier living. Paying off debt by using the debt snowball is also a path that begins with small steps that roll into bigger steps, like a snowball rolling down a hill.
So what is the debt snowball and how does it work? The idea is simple enough. While continuing to pay the minimum payments on all other debts, pay as much as you can towards the balance of your smallest debt. Once that first debt is paid off, you can now roll the money you were paying on the smallest debt into the payment of second largest debt. Then continue the process, by adding what you were already paying on the smaller debts into the payment of the next largest debt. By following the debt snowball plan, you see the first results of paying down your debt more quickly and also your ability to reduce debt grows and grows.
There are several informative videos on the Debt Snowball that break down the steps for you. Check these out to get you started. And then consider signing up with one of our excellent coaches who can help you apply these steps for free!