Guide Contents

How to Pay Off Debt With the Debt Snowball

Step 1: List your debts from smallest to largest (regardless of interest rate).

Step 2: Make minimum payments on all your debts except the smallest debt.

Step 3: Throw as much extra money as you can on your smallest debt until it’s gone.

Step 4: Take what you were paying on your smallest debt and add that to your payment on the next-smallest debt until it’s gone too.

 

Step 5: Repeat until each debt is paid in full and you’re completely debt-free!

When to Pause Your Debt Snowball

You’re having a baby. 

Continue to make minimum payments on your debt so you can pay for those expenses as they pop up and start stockpiling cash until the baby comes. Once everyone comes home from the hospital healthy and happy, restart your debt snowball.

You unexpectedly lose your job.

A job loss can turn your world upside down. If this happens, take a deep breath, remind yourself it will be okay, and then go into spending survival mode. Focus on paying for the Four Walls (aka the basics): food, utilities, shelter and transportation. If you can, make minimum payments on your debt, but nothing extra.

Your family experiences a health crisis.

A serious medical diagnosis can throw your family into a whirlwind of emotions. During this season, it’s more important to get the care your family needs than to pay off debt. If a major surgery, hospital stay or expensive treatment is on the horizon, pause your debt snowball and cash flow your medical bills instead.

You’re going through a major life-change, like a divorce.

If you’re about to go through a divorce (or you’re in the middle of one), you’re probably just trying to keep your head above water both emotionally and financially. During this major life transition, you don’t have to go heavy on crushing your debt. Take care of you. Take care of your family. Keep budgeting through the changes, and you can jump right back into your debt snowball once you settle into your new normal.   

You have an outstanding IRS bill.

Pausing your debt snowball to pay the IRS is a smart idea for two reasons: First, their interest rates and penalties are really high. Second, they almost have unlimited power to collect your debt. Yeah, don’t ignore them. It’s wise to get the IRS out of the way and then restart your debt snowball.

Debt Relief Scams to Avoid

Tips to Pay Off Debt Faster

Break up with debt.

You have to draw a line in the sand and decide that you’re done with debt. No more swiping that credit card or taking out personal loans for things you can’t pay cash for. Those habits have gotten you where you are now, and they won’t help you get out. If you want something different, you have to do something different.

Use the envelope system.

The cash envelope system (aka cash stuffing) is a great way to help you get your spending under control and stick to your debt payoff goal. You take the amount you’ve budgeted for certain categories (like groceries or clothing) and stick it in labeled envelopes. Your goal is to only spend the cash you’ve got in each envelope for the month. This is the kind of habit that will hold you accountable and keep you on track.

Meal plan.

Food is usually our biggest budget buster. But meal planning can help you save more each month. And listen, it doesn’t have to be this overwhelming chore that takes up your whole weekend. Just choose a couple budget-friendly meals, try to use ingredients you already have, and decide which nights you’re cooking and which nights you’ll have leftovers. Easy peasy.

Sell stuff.

One person’s trash is another person’s treasure. Dig through your kids’ rooms and search through the black hole of your closet to find things you can part with. Then sell your stuff online to make some quick cash. Or if you'd prefer to sell your stuff the old-fashioned way, host a garage sale.

Get a side hustle.

Stop contributing to your retirement investments—and that includes your 401(k). Why? Because right now, you want to throw everything you can at your debt so you can pay it off faster. Don’t worry, it’s only temporary. You can start investing again once you’ve paid off your debt and saved up a fully funded emergency fund. By then, you’ll have enough money freed up that you can put even more of your income toward retirement.

Ditch your car payment.

Think about how much faster you could pay off debt if you traded in your expensive ride for a used car you can actually afford. Then every month, you could throw that car payment at your debt snowball—instead of out the window. And later, when you’re debt-free, you can save up to buy your dream car in cash!

Or if you’re a two-car family, could you downsize to one car while you pay off debt? Sure, it takes some extra coordination, but you’d be surprised how this can really help you kiss that debt goodbye.

How to Stay Motivated to Pay Off Debt

Find your “I’ve had it” moment.
 

Does debt make you mad? It should! Think about what debt is keeping you from doing and how those monthly payments make you feel. If you’re going to fully commit to paying off your debt, you’ve got to see debt for what it is—the enemy. You need to say, “I’ve had it!”

Remember your why.

What are the reasons you want to ditch your debt? Maybe your dream is to build a legacy—to create a home where your children will never watch their parents stress out about the grocery bill or the minimum payment on their credit card. Maybe you want to pursue a passion or start a business. Or maybe you want to build wealth, live and give like no one else . . . but you have to get out of debt first. Get specific with whatever your why is.

When you’re feeling discouraged, you need something that will remind you of how you’ll feel once you’re debt-free. Every sacrifice you make today gets you closer to the kind of future you want to live.

Break down your goals.

The debt snowball method works by tackling your smallest debts first, but even that can feel overwhelming. So, instead of focusing on a $15,000 balance, divide it into smaller, manageable chunks—whether it's $5,000 or $500. Setting smaller goals makes progress feel achievable, keeps you motivated, and reinforces that you can do this!

Visually track your progress.

Because so many of us are visual learners, it can help to actually see your progress toward your money goals. You can place a sticky note on your bathroom mirror to remind yourself of your reason for getting out of debt. Maybe you want to draw a piggy bank on poster board and color it in as you pay off your debts. Having visual reminders will keep your goal on your mind and help you reach it faster.

Give yourself small rewards.

It’s okay to give yourself small rewards to stay motivated along your debt-free journey. You could treat yourself to something as small as a latte from your favorite coffee shop or maybe some shoes that are on sale. Better yet, add those rewards to your visual tracker to have something to look forward to when you reach a goal! You choose your rewards—just make sure they aren’t so extravagant that they slow down your progress.

Quit the comparisons.

It’s great to get inspired by other people’s stories, but avoid comparing your story to theirs. Everyone’s debt journey is different—some have less to pay off or more income to work with. So don’t let comparison keep you stuck. Stay focused on your own path.

Find your cheerleaders.

Reaching your goals is much easier when you have people walking alongside you. Everyone needs a cheerleader! So, find someone to encourage you and hold you accountable on your debt-free journey—whether it’s a friend, church group, financial coach or Financial Peace University class.