Debt Snowball

The debt snowball method focuses on paying off the smallest debt balance first while making minimum payments on all other debts. Once the smallest debt is eliminated, its payment amount rolls into the next smallest debt, creating a snowball effect of increasingly larger payments.

Popularized by personal finance educator Dave Ramsey, this strategy leverages behavioral psychology. Eliminating a debt entirely provides a motivational boost that helps people stay committed to their repayment plan, even though they may pay more total interest compared to the avalanche method.

Research supports the psychological advantage of the snowball approach. Studies show that people who see early progress are significantly more likely to become completely debt-free. The snowball method trades mathematical optimization for sustained motivation, which for many people produces better real-world outcomes.