Paying off debt: The Snowball Effect

picture of a snowball
I wish it snowed where I live.

So first, I want to start off by saying that the Snowball Effect is a real thing. Despite how cute it sounds for the upcoming holiday/winter season, I promise I’m going to share some actual useful advice that you’ll be able to take and share with all your family and friends.

Today’s post is going to be about budgeting your money. But not just budgeting your money any kind of way. I’m going to share with you guys what the Snowball Effect is and how it’s helped me build my credit and pay off my debt quicker than ever before.

If I’m being honest, I probably first heard about this concept from my mom…or maybe Dave Ramsey. But it wasn’t until I had a conversation with my hair stylist that I really started thinking about changing the way I pay my bills. My stylist really took the time to explain to me what the Snowball Effect is and since then, it has tremendously helped me.

According to Dave Ramsey’s website, the Snowball Effect or the “Debt Snowball Method” is:

a debt reduction strategy where you pay off debts in order of smallest to largest, gaining momentum as each balance is paid off. When the smallest debt is paid in full, you roll the money you were paying on that debt into the next smallest balance.

This debt reduction strategy is compared to a snowball because just as a snowball rolling on the snow gets bigger, your bill payments will also do the same. Below is an example of what all this means. I’ll show you the actual debts that I started with at the time and how I paid them off soon after.

Loan 1 ———— $40/month ($100 remaining balance)

Loan 2 ———— $60/month ($200 remaining)

Loan 3 ———— $102/month ($200 remaining)

Credit card —– $20/month ($300 remaining)

Car note ——— $310/month ($8,400 remaining)

Step 1. Since I only had $100 remaining on Loan 1, I went ahead and bit the bullet by paying off that remaining balance in full.

COMPLETED: Loan 1 — $40/month ($100 remaining balance)

Step 2. Instead of throwing that extra $40/month into my pocket, I went ahead and paid that amount towards Loan #2. In total, I was paying $100/month ($60+$40) towards this loan. Because of that large sum, I paid off this balance in a couple of months.

COMPLETED: Loan 2 — $60/month ($200 remaining)

Step 3. You can imagine how anxious I’m getting at this point. I now have $100 in my pocket that I could use for anything I want…buying some new clothes, going out to eat at a nice restaurant, getting someone a really nice gift “just because”…my options were endless. But I was so impressed with how my debt reduction was going that I honestly couldn’t stop. So I kept going. I took that extra $100 per month and put it towards my third loan. I paid Loan 3 off super quick. Maybe like, a month and a half.

COMPLETED: Loan 3 — $102/month ($200 remaining)

picture of money
Use your bills to pay your bills.

Step 4. So here’s where I got a little strategic. By now, I have $202 total that I was previously paying towards my loans. The only major monthly bills I have left are my credit card and my car note. What I decided to do was pay more on my credit card, but not too much more. This is because my remaining balance is so low and paying off a credit card too fast won’t help my credit. So I decided to pay $50 per month on the card instead of the usual $20, and I put the rest of the money ($152) towards my car note. Recently, I had to use my credit card for an emergency, so I’m back to square one with this one. But I’m fine with that because emergencies are a part of life and reducing my debt has still helped me tremendously.

PENDING: Credit card — now $50/month ($300 remaining)

Step 5. My car note is my largest balance, and when I began this Snowball journey, I was still about $8,400 in the hole PLUS INTEREST. The leftover amount I mentioned in Step 4 ($152) goes straight to my car note now. I’m paying a minimum amount of $462 each month for my car. Yes, it’s a lot of money, but it’s totally worth it in the end. The best part about paying more on your car note is that the more you pay, the more your interest goes down. On top of that, I’m currently ahead on my payments by two months. I wasn’t supposed to be done paying my car off until the end of 2019, but since I’ve started this debt reduction method, I’ll definitely be paying it off by fall of next year. Below is my remaining balance on my car after just six months of trying the Snowball Method.

PENDING: Car note — now $460-480/month ($5,900 remaining)


I love the Snowball Effect because it keeps me focused on my priorities. In addition, because I’m so ahead on my payments, I have enough wiggle room if I have to use that money for an emergency. But I do my best to keep paying these debts off no matter what.

Using this method has also taught me how to be better with my money overall. It’s taught me a lot of discipline. I’ve been able to save some of my money here and there, and I just got done paying a really large bill in full that I hadn’t even set up a payment plan for yet. If you’re constantly stressing over your paycheck and bills, then this might be a helpful method for you.

What do you think about the Snowball Effect? Have you or anyone you know ever used this method? Did it work? Let me know your thoughts in the comment section below!

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3 Replies to “Paying off debt: The Snowball Effect”

  1. This is super helpful! I have loads of student loan debt and it’s I think 4 different loans currently. If I pay off the smallest, that’s such a wonderful idea to add it to the next one! I won’t even notice any different because I’m already used to not having that amount, thanks for sharing!

    Liked by 1 person

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