Anyone in debt knows the feeling of being crushed by it. The more you debt, the more hopeless it feels, and it sometimes becomes tempting to just add to it because there’s nothing else to do and no way to repay it all. Debt snowballs may seem like a bad thing, but they’re actually a tool to help erase your debts with a little effort put in on your part.

The biggest problem many people have with debt is that it’s hard to maintain motivation to pay it off. When you don’t actually see the money, it just seems like numbers, and paying off the loans or bills with the highest interest just doesn’t maintain your interest. For this personality type, debt is particularly dangerous! Fortunately, the debt snowball targets just this situation.

Step one in the debt snowball process is simple: assess your debt. This means that you need to sit down with your latest bills and write a list so you know exactly what you owe, to whom, what the interest rates are, and what the minimum payments are. Create an organized list of these factors for each debt you currently are in, and you’re on the way to recovery from the suffocation of debt.

Next, you need to start ledger, spreadsheet, or some way that makes sense to you in order to organize your debt by amounts. List the smallest debt first, followed by the next largest amount, and so on. The largest debt you owe should be on the bottom. Next to each debt, write the minimum payment so you know what the least amount you have to pay monthly is.

What you’re going to do monthly is use all your available money to pay off the smallest bill first, and just pay the minimum payments on others. Some people disagree and point out, rightly so, that it’s more effective to pay off the debt amount with the highest interest. While this is true, many people suffer from motivation issues and will simply dig themselves further into debt if they don’t see progress within a reasonable timeframe. If this describes you, the debt snowball method may actually be better, as some debts paid off are still better than none at all.

If you don’t have a budget, you need to look into creating one as soon as possible. There’s a good reason people in bankruptcy are forced to do this by many bankruptcy laws – it makes you get a grip on your money situation quickly. You may find that you can find money to spend guilt-free while allocating a little extra to your debt payments.
Once the first bill is paid, congratulate yourself, but don’t give up yet. Now that a little extra money is freed up, pour all of it into the next-highest bill, and so on. By the end of this process, the money you have available to pay down your debt will have snowballed into a large amount, so it won’t take forever! This is why it’s called a debt snowball.

The debt snowball method is a very effective way of paying off debt if you’ve already tried everything and never found a method that properly worked for you due to motivation issues. With this method, you can see just how much money you’re freeing up by paying off your debt and eliminate the smaller debts quickly, thus sustaining your motivation to pay off the big bills.