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The Debt Snowball Method

Updated: Jun 7, 2021

The Debt Snowball Method is one that I've personally found to be the easiest way to pay off debt. It may/may not be similar for you, so I'll start by saying this - One size won’t fit all.

If however, this is intriguing enough for you to keep reading, I'll step out the ways I used this method personally.

First off, I’ll be the first to admit that becoming debt-free isn't easy.

More so for us as young Pacific Islanders (especially for us women) who tend to accumulate a lot of debt quite quickly, then struggle to pay it off. See stats in this blog. Between the outrageous interest rates and paralyzing repayment rates, we're hard-pressed to repay our debt, without inadvertently going into further debt, in a vicious cycle. Sound familiar?

Today, I'll walk you through a method to get through this stifling merry-go-round. I'll talk about what the debt snowball method is; the advantages and disadvantages of this method; and how you can set up your own debt snowball.

What is the Debt Snowball Method, you might ask?

As the name implies, this method is akin to a snowball plummeting down a snowy mountainside - maybe not as easily relatable to a Pacific Islander, but please bear with me (FYI: I haven't seen snow either, outside of movies - so this one's for our active imaginations).

As the snowball rolls further downhill - it gets bigger and bigger. This is the same with your debt repayments.

They're minimal amounts at first - but over time, become bigger and bigger payments going towards paying off less and less debt.

What does this mean, exactly?

When you use the debt snowball method, you'll be making minimum payments to all your debts, except for the one with the lowest total.

For your lowest debt, you will instead be paying your minimum repayment amount including all extra income, until this is fully repaid.

Advantages and Disadvantages

Repaying debt is always difficult.

There's a reason the bank calculates your minimum loan repayment amount for you with a very precise formula. Anything on top of that amount would have a severe impact on your take home pay.

Sounds dire, doesn't it?

There's a flip side to this, though. I'm always a cup half full person, so I'd like to think of it this way...

When I use the debt snowball method, I'm able to pay off my lowest debts first... This means I free up money I can put towards my larger debts in the future. This is the essence of the debt snowball method and it’s biggest advantage. It is also the reason why I am a huge fan.

Still hard to picture? No problem, I've broken it down into five easy steps that will guide us through this process.