Paying off debt is important if you want to be financially independent and reach other financial goals. One method of paying off debt is the Debt Snowball method. The Debt Snowball method is a popular method of paying off debt because it helps you practice good financial habits and allows you to see progress very quickly in your debt payoff plan.
The first step of the Debt Snowball method is to list all of your debt in order of smallest to largest amounts owed back. The amount of interest is not important for this method. This list of your debts is now the order in which you should pay off your debt from smallest to largest. The idea is when you have a snowball and are rolling it down a hill, it will be small at first, but the snowball will build into a larger snowball by the time it reaches the bottom of the hill. Your debt is similar. You start with the smallest loans and quickly pay those off. Then you work on the larger ones, which will take more time, but you should have more momentum to tackle these large debts.
This method of debt payoff works for thousands of people. Most people can pay off their small loans right away or within a few months. Once those loans are paid, the money going towards the monthly minimum payments can be used to save for the next loan. Seeing early progress towards paying off debt will give you the motivation you need to tackle the larger loans.
