Paying off debt is a long game, and motivation matters. The snowball is designed around that.
Direct answer
With the debt snowball, you list your debts from smallest balance to largest, pay the minimum on all of them, and put every spare amount toward the smallest. When it is cleared, you add its payment to the next smallest. Payments grow like a snowball rolling downhill.
Steps
- List all debts with balance, interest rate and minimum payment.
- Order them smallest to largest balance.
- Pay the minimum on all but the smallest.
- Put all extra money on the smallest.
- When it is paid off, add its full payment to the next one.
- Repeat until you are debt free.
A simple example
You have three debts: a store card, a car loan and a larger loan. You clear the store card first. The money you were paying on it moves to the car loan, which now gets a bigger payment, and so on.
Pros and cons
Pros: quick early wins, fewer accounts to manage, strong motivation. Cons: you may pay more interest overall than with the avalanche method.
When to choose it
Choose it if you need motivation, have several small debts or have given up on repayment plans before.
Where Teyro fits
Teyro's Budgeting for Beginners course turns this into short lessons you can play in a few minutes a day. It has 50 lessons, and you can start free.
The bottom line
The best method is the one you will actually follow to the end.
This is general education, not personal financial advice.
