Debt Snowball Method Tracker PDF

What’s the Debt Snowball method?

The debt snowball method is a popular approach to boost your ability to repay your debts. The principle is simple: each debt is assigned a “priority rank”. The debt with the smallest outstanding amount is the one that should be repaid first, while the debt with the largest remaining balance is the lowest priority.
Every time you finish repaying one debt, you put its minimum payment towards the other debts. This is why the method is called the “snowball” method. With the compounding effect, you will be able to create a huge payment capacity, and the largest debts, which are the final ones, will be repaid much more efficiently.

Step by Step process to Apply Successfully the Snowball method

Using the snowball method is every easy, here is a step-by-step process to guide you through the process.

Step 1: List Your Debts

Write down all your debts, including balances, minimum payments, and interest rates.

Step 2: Order Debts from Smallest to Largest

Arrange your debts in ascending order based on the balance, starting with the smallest balance first.

Step 3: Continue Making Minimum Payments

Ensure you continue to make the minimum payments on all your debts to avoid late fees and penalties. You should not put any extra money towards debts that are not top-priority, only repay the minimum required payment on those debts.

(Optional) Step 4: Allocate Extra Funds to the Smallest Debt

Determine how much extra money you can allocate towards debt repayment each month, and apply this extra amount to the smallest debt on your list. This step is optional but is a game-changer since it will save you a lot of money on interest in the long run.

Step 5: Pay Off the Smallest Debt

Continue paying the minimum payment plus the extra amount until the smallest debt is completely paid off.

Step 6: Move to the Next Smallest Debt

Once the smallest debt is paid off, take the total payment amount you were making on that debt (the minimum payment plus the extra amount if there is one) and add it to the minimum payment of the next smallest debt on your list.

Step 7: Repeat the Process

Continue this process of rolling over payments to the next smallest debt until all debts are paid off!

Why should I repay my debts with this method?

Unlike the debt avalanche method, the debt snowball method may not be the most cost-effective. However, many people love it because it makes staying motivated easier. It’s highly effective on the psychological aspect of repaying debt, giving you the pleasant feeling of making progress and seeing the end of the tunnel of being in debt.
Furthermore, this method works with all kinds of debts: house mortgages, car loans, student loans, credit cards, etc.

Who made this method popular?

The debt snowball method was made famous by Dave Ramsey, a highly regarded personal finance expert in America. Ramsey is the author of several best-selling personal finance books and hosts the radio show "The Ramsey Show." With his wise financial advices, he has helped many Americans achieve financial freedom.
The debt snowball method is now widely used across the United States, thanks in large part to Ramsey's influence.