How to Pay Off Online Loans Using the Debt Snowball Method

The debt snowball method prioritizes paying off the account with the smallest outstanding balance before moving up the chain of debt. Many financial advisors favor it because it promises the quickest results.

It earns its name because it harnesses the momentum of little payments to grow until you can take out big debt. Just like a snowball that grows bulkier as it rolls downhill, your debt payments increase in size as you move through your loans.

How do you make a snowball? Here’s a step-by-step guide:

First, you must list all your outstanding unsecured debt that doesn’t include a mortgage. You’ll focus instead on any lines of credit, credit cards, or short-term personal loans.

Step One

Once you have this list, order them by outstanding balance from smallest to largest.

Step Two

Make sure you can cover the minimum monthly payment for every account on your list.

Step Three

Pick the account with the lowest balance as your focus and put your extra cash towards it on top of its monthly minimum. Stick with this step until you pay off this account.

Step Four

Choose the next lowest balance. Now that you’ve paid off the first account, you can roll in what you put towards it (i.e., the extra cash and its monthly minimum) into the second smallest account.

Step Five

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