Building the biggest possible snowball isn’t about effort, it’s about momentum. By packing a small snowball and rolling it, it will grow and collect more and more snow with every roll, until it grows into a giant snowball.
The same principal can be applied to eliminating your debt.
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Let’s line up your debts (excluding mortgage) from smallest to largest, regardless of interest rate:
Medical expense: $1,000
Min payment: $25
Credit card: $2,000
Min payment: $75
Student loan: $5,000
Min payment: $150
The debt snowball method says you should start by eliminating your smallest debt, in this case, the medical expense.
Now, let’s say you have about $200 a month to dedicate towards paying off your debt.
Instead of distributing that $200 evenly towards all your debts, put the $200 plus the minimum payment towards your medical debt, while continuing to pay the minimums on your credit card debt and car loan.
By contributing $225 a month, your medical debt will be paid back in 5 months.
Now, roll that $225 into paying off your credit card debt, plus the minimum payment.
At $300 a month, your credit card debt will be gone for good after 6 months.
Now, your snowball is gaining major speed!
Roll that $300 into your student loan payment, and become completely debt free in 8 months.
The debt snowball doesn’t cost you any extra money, it simply builds momentum so you can feel the impact of your debt repayments on a growing scale.
This is one snowball fight you can definitely win.
