Debt Snowball Method

Definition: The debt snowball method is a repayment strategy where you pay off your debts in order of smallest to largest balance, regardless of interest rates. By tackling the smallest debts first, you build momentum and motivation as you eliminate balances one by one.

Example: If you have three debts – $500, $2,000, and $10,000 – you would focus on paying off the $500 debt first while making minimum payments on the others. Once the $500 debt is cleared, you use that payment amount to tackle the $2,000 debt, and so on.