The Snowball Method

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The Debt Snowball Method

Simply put, it means paying off the smallest of all your loans as quickly as possible.

How to do it?

1. List all your debts.
2. Pay the minimum on all of them except the smallest debt.
3. Pay as much extra cash as possible to the smallest debt.
4. Once the smallest debt is paid, you take the money you were putting toward that payment and roll it onto the next-smallest debt owed. Ideally, this process would continue until all accounts are paid off.

Every time you borrow money, you’re robbing your future self.

Nathan W. Morris

 

Why is the snowball method so popular? By starting with your smallest debt you are getting (hopefully) a fast win and create momentum!

The envelope budgeting system involves assigning spending categories to individual envelopes.