What is the debt snowball method? How it works in 5 simple steps

Paying off debt can feel overwhelming, especially as you stare down multiple balances, wondering if you've made any progress. The debt snowball method gives you a simple, step-by-step way to build momentum by focusing on one balance at a time.

This method has helped many families get out of debt by starting small and building momentum. Here's how it works, and why it just might work for your family, too.

What is the debt snowball method?

It’s a way to pay off debt that’s designed to keep you going. You list out everything you owe, starting with the smallest balance. Then you focus all of your extra money on that one, while keeping up minimum payments on the rest.

The idea isn’t to worry about interest rates, just paying off the smallest balance first.

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That first win feels good. And once it’s gone, you “roll” that payment into the next debt. Each time you pay something off, your momentum builds. 

5 steps to following the debt snowball method

The debt snowball method is simple to do. Start with these five easy steps. 

1. List all your debts from smallest to largest

Write down every debt you owe: credit cards, medical bills, personal loans, store cards, etc. Sort them by total balance, from smallest to largest.

You don’t factor in interest rates with the debt snowball method. That’s what makes this method different, and for many families, more motivating.

2. Keep making minimum payments for all your debts

While you’re laser-focused on the smallest debt, don’t drop the ball on the rest. Continue making the minimum payments on all your other bills to keep your accounts in good standing.

This way, you’re not racking up late fees or damaging your credit. You’re simply reallocating the extra funds to where they motivate you the most.

3. Throw all of your extra money at the smallest debt

Any extra income (a bonus, tax refund, side gig earnings, or money you freed up in your budget) goes straight toward the smallest debt.

Even small amounts add up quickly. And if your teen has their own income from a part-time job or even allowance from chores, this is a great chance to talk about how extra effort can fast-track financial goals.

4. When that debt’s gone, move to the next

Once you’ve paid off your smallest debt, take a second to celebrate. Seriously. That’s a win!

Then roll the amount you were paying on that debt into the next smallest one. This is where the “snowball” comes in. As you continue to pay off the debts, the snowball (or the amount you’re putting toward each balance) keeps increasing.  

5. Keep following the process until you’re debt-free

Keep going! Each time you pay off a balance, you free up more money to throw at the next. Over time, your payments get bigger, you progress faster, and that overwhelming feeling starts to fade.

Seeing those zero balances adds up, both financially and emotionally.

Why the debt snowball method works for many families

The debt snowball method is easy to follow and is built on consistency, eliminating the need for complicated spreadsheets or number crunching. All you need is a list, a plan, and determination.

It also works well for teaching kids and teens the value of progress. Whether they’re paying off a subscription, repaying a parent, or learning how to manage their own debit card, the same principle applies: Start small, stay focused, and build confidence.

How Greenlight helps your family stay on track

Greenlight, the #1 family finance and safety app, makes it easier to stick with goals like this, especially if you’re working toward them as a family.

With Greenlight, you can:

• Create customized spending and saving goals

• Set up budget categories and track progress

• Teach kids to use their own earnings (like from chores or part-time jobs) to hit savings or debt-repayment targets

You’re not just modeling good money habits; you’re actively including your kids in the process, which sets them up to make smart choices later on.

The debt snowball method isn’t perfect for everyone. But it is simple, motivating, and doable. Sometimes, that’s exactly what a family needs.

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