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How to Snowball Your Debt & Reclaim Your Paycheck

Jul. 26, 2018 YNAB

Maybe you regret all those late-night Amazon splurges and trips to the mall. Or perhaps you’re strapped (and stressed) from student loans that present-day you wishes 20-something you hadn’t borrowed in the first place. Or maybe you’ve just hit some rough patches and had nowhere to turn but plastic.

It doesn’t matter how it happened, debt is the worst. And it’s reasonable to feel anxious, sad and even angry about it—but how about forgiving yourself (or your circumstances) and channeling all of that energy into a better tomorrow, instead?

If you’re ready to stop worrying and take action, you’re in the right place. Today, we’re going to look at a common debt repayment strategy, the snowball.

Don’t Let Debt Take You Down:
Make a Snowball

Now, before you grab your mittens, there are a few things you need to do, first:


First, you must draw a line in the snow. From this day, forward, commit to spending less than you earn—that means no more debt-funded expenditures!

And, I can already hear the backlash: But what about a mortgage? Or what if you use your credit card to earn rewards, but pay it in full every month? Look, there are advantages, disadvantages and exceptions to nearly everything in life … but if you’re stuck with a pile of debt that could rival a snow-capped mountain, then ”no” is the way to go!


Now it’s time to face the damage, head-on. Make a list of every debt that you owe, including the balance owed, minimum monthly payment and interest rate for each.


Finally, determine how much money you’re able to throw at your debt each month. This is where your budget comes into play.


OK, are you done with Steps #1 through #3? Then, snowsuit up, my friend. It’s time to begin your snowball. The way this works is simple:

  1. Grab the list of debts that you created, above.
  2. Put your debts in order of size, starting with the lowest balance.
  3. Every month, pay the minimum amount due for each loan.
  4. Determine how much extra cash you can allocate towards your debt for the month, and put those dollars towards the smallest loan balance. Get creative. Where else can you cut back to free up extra dollars?
  5. Continue this process until all of your loans are paid.

So, let’s say that you’ve got a $500 credit card balance, a $15,000 student loan balance and a $1,000 credit card balance. Your debt snowball would look like this:

Balance Owed Interest Rate Minimum Due
Credit Card #1 $500 18% $20
Credit Card #2 $1,000 15% $80
Student Loan $15,000 3% $100
Minimum Payments Total: $200

Your minimum monthly payments come to $200, so if you’re able to budget $250 for debt repayment, you would send the extra $50 to Credit Card #1, your smallest debt.

Repeat this process, every month, until Credit Card #1 is paid off—when that happens, move all of your extra dollars towards paying off Credit Card #2, the second smallest debt. (This includes the $20 that was previously allocated to the minimum payment on Credit Card #1).

It’s called the snowball method because every time you pay off a debt, you have more dollars available to put towards the next debt. So, like a snowball rolling downhill, your payments get larger as you go.

Free, Online Snowball Calculators

You can set up your debt snowball using a spreadsheet, or use one of the many free, online debt snowball calculators.

The advantage of using a calculator is that, after you input all of your data, most of them allow you to toggle between different variations of the snowball method to find the payoff plan that works best for you. (For example, you might prefer the avalanche method, in which you allocate your extra dollars towards the loan with the highest interest rate, instead of the smallest balance.)

Here are a handful to choose from:

  • – The free version offers all of the features you need to set up a debt snowball and pay off your balances. You can also make extra payments towards your debt and view your progress, percentage of available credit used, and projected payoff date.
  • – You can try this super-simple calculator without setting up an account (although, if you want to revisit your data in the future, you’ll need an account).
  • Vertex 42 – This is actually a spreadsheet. Just download the file to your computer (no account required), and manage up to ten of your debts with the free version—which includes the ability to toggle between different payoff strategies to see which one is right for you.
  • – You can try this one out, without giving up your name, email, or any other sensitive information. After you input your debt balances, interest rates and minimum payments—voila!—the calculator tells you which repayment method is, from a numbers perspective, best for you.

Your Efforts Shall Be Rewarded

Now, you’ve got everything you need to tackle your debt. So, get to it. Time is literally money (think of the interest!).

Plus, as your debts grow smaller, your credit health will improve. The ratio of how much you owe to how much available credit you have accounts for 30 percent of your FICO score. The less available credit you’re using, the better your credit health—and that means easier approval if you’re applying to lease an apartment, better rates when it comes to security deposits, utility deposits and even car insurance rates.

Not only that, but you deserve a life that is free from the stress of debt. Imagine getting paid and not owing one single penny to a lender or creditor. You pay your bills, buy some groceries and have money left to invest … or save … or spend. It’s up to you!

Sweet (Debt) Relief

The best part is, once you’ve got a plan to tackle your debt for a better tomorrow, today starts feeling much more enjoyable, too. When you organize all of your numbers into a snowball, it’s like setting them down. Your mental baggage lightens. It’s actually hard to believe how much a plan can change your outlook, no matter how deep your debt.

If you followed the steps above, now you’ve got a budget that gives you a crystal-clear view of your priorities, and your spending is aligned to support them. You might not enjoy cutting back to put extra cash towards your debt, but it’s a lot easier to downgrade and cancel ‘extras’ when you see the effect that those dollars have on your debt snowball—they could literally shave years off of your repayment time, saving you thousands of dollars in interest!

And, don’t worry, you’ll find plenty of budget-friendly ways to enjoy life, even if money is tight. You might find that you don’t even miss your old spending habits. Life feels pretty great when you’re intentional with your money.

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