The snowball debt plan. I started mine in 2010. I got completely out of debt (including my house) by 2014. And, I’ve never looked back.
I freakin’ love the debt snowball method. I recommend it to anyone that’s willing to listen! In fact, I love it so much, and I want so desperately for people to experience its power that I built a debt tracker spreadsheet myself! Not only that, I’m now offering it as a debt snowball spreadsheet free download!
Check it out!
Want to know more about how it works? Read through this post and take a look at the instructions toward the end of the article!
Sidebar…If the above FREE tool doesn’t have enough columns for your debt, we a couple of BIGGER ones! One can handle 16 debts and the other one can handle up to 32 debts!! Just click the icons below!
Oh, and if you’re curious about how the debt snowball pays off vs the debt avalanche, you might want to check out this tool where you can see the payoff journey for each method side by side! The debt snowball vs debt avalanche excel spreadsheet! Check it out!
When you hear people talking about the snowball debt plan, they’re referring to the debt snowball method.
And, the debt snowball method isn’t nearly as complex as some people make it out to be.
In fact, it’s fairly simple…
Here’s how the whole debt snowball process works:
- Put all your debts on paper
- List them from the smallest balance to the largest balance
- Make minimum payments on all of them except the smallest one
- Put as much money toward that smallest debt each month and pay it off as quickly as possible.
- Then, once the smallest one is paid off, start tackling the next smallest debt with a vengeance!
- Continue the process until all your debt is gone (which is usually sooner than you initially planned on)!!
So, put simply, the debt snowball meaning is just paying off your debts from smallest to largest as quickly as possible.
It’s a basic concept, but it’s astounding how well it works when you’re all in!
Debt Avalanche Method
The debt avalanche method is still a way to pay off your debts quickly, but it has a different theory, and therefore a differing set-up and method for paying off your debts.
The debt avalanche method (and theory) is this:
- Debt is bad because you’re paying interest on your borrowed money
- The worst debt is the highest interest debt because it’s robbing the largest percent of your money each month
- Therefore, you should pay that high interest debt off first!
So with the debt avalanche method, you arrange your debts – not smallest to largest this time, but from highest interest down to the lowest interest, regardless of the size of each loan.
Debt Snowball vs. Debt Avalanche
Between the debt snowball and the debt avalanche, which is better? Which one will help you pay your loans off quicker?
A super nerd chooses the debt avalanche.
If you talk to a super nerd about this debate, they’ll almost always choose the debt avalanche over the debt snowball.
After all, if you have additional money to put toward your debt every month, and you pay off your debts from the highest interest down to the lowest interest, you’ll save money in interest payments and therefore you’d pay off the loans sooner than if you used the debt snowball method.
So the debt avalanche should always be the method of choice then, right?
I mean, it always pays down the debt faster (since you’re paying off that high interest debt first), so it wins every time!…
Not so fast…
The average Joe chooses the debt snowball.
The debt avalanche wins if you assume you’ll always have a set amount of money to put toward your debts, and that you’ll keep up with those payments until all the loans are paid off.
But you know what? This rarely happens.
Maybe your highest interest debt is $5,000. Even if you’re able to put $1,000 extra dollars toward your debt each month, it would still take you 5 months to pay this debt off! And this is the first debt you’re tackling?
- What are the odds that you stick with your plan for 6 solid months?
- And what are the odds that you’ll be excited enough to put all of your money toward this loan?
The debt snowball breeds excitement
Instead of tackling the highest interest debt, what if you tackled your lowest amount?
- Let’s say it’s a $200 credit card. You pay it off in just a week.
- Next on the list is a $300 store card. You pay that off in the next week.
- Then, you have a $500 credit card. You pay that off in just under 2 weeks.
Can you feel the excitement of this?
You’re killing your debts! You’ve already taken down three cards and you’re ready to hit the fourth debt! The momentum is building and you’re ecstatic!
Now, instead of slating just $1,000 a month toward your debts, maybe you can work overtime or take on a side hustle to take down your debts even faster!
This excitement and the extra effort wouldn’t happen with the debt avalanche method. It’s why I believe the debt snowball method is superior to the debt avalanche method.
The super nerd will pull out their snowball vs avalanche calculator and show you how the debt avalanche will save you time and money.
But you know what?
Life is rarely about calculations.
It’s encompassed with feelings, emotions, purpose, pride, self-worth, progress!
Get yourself excited about your debt payoff journey, and you’ll win big. Way bigger than that debt avalanche spreadsheet will tell you (and by the way, Harvard agrees ;))!
That’s why my pick early on was the debt snowball method, and it’s why it still is today!
Snowball Debt Spreadsheet Download (It’s FREE!)
Now it’s time for the debt snowball tracker (and it’s printable too!).
If you didn’t see the link earlier in the post, here it is again:
Once you click the link, you should see the download at the bottom of your screen. Just click it to open it, then be sure to enable the sheet so you can use it and start updating the default debt snowball numbers with your own!
Debt Snowball Spreadsheet for Google Sheets
Don’t have Excel?
Try using Google Sheets instead:
- Click this link and save the file to your computer
- Then, open Google Drive
- Click “New” in the upper left
- Then click “File Upload”
- Find the debt snowball calculator file that you just uploaded and saved. Select it, then click “Open”
- It will show up on the bottom-right of your screen, click it.
- Then, once it opens, at the top of the file select “Open with Google Sheets”
BOOM! Now you have the debt snowball calculator in Google Sheets!
How Does the Debt Snowball Excel Download Really Work?
When you open the file, you should see a page like the one below:
There are instructions in the file, but putting in your own numbers really couldn’t be easier.
Wherever there’s a peach cell, that’s where you should enter information.
Simple as that.
More specifically though, here’s a bit of step-by-step instruction for the debt snowball tool:
- Enter in all your debts from smallest to largest (FYI – you can rename each debt title if you want to…instead of “Debt 1”, “Debt 2” etc.)
- Enter the current balances
- The minimum payments
- And the interest rate of each debt
- If there are more debt entries than your number of debts, just enter zeros for those debts
- Enter the extra amount you’ll be putting toward the debts each month (upper portion of the Excel spreadsheet)
- Finally, if you have money stashed away that you want to dump onto the debt to get started, enter that into the “One-Time Start-up Payment” line.
And that’s it!
With all your entries in place, the debt snowball calculator will show you when each debt will pay off in full.
Scroll over to the debt that takes the longest to pay off (likely the largest debt on the far-right, but not always), look to see when your last payment is on that debt (months are on the far left), and that’s when you will be completely debt free!! Woot woot!
When most run this calculator for the first time, they are shocked to discover how quickly they could actually do it. And that’s what motivates them to get started immediately!
They see that it IS possible for them to pay off all their debts. They CAN do it in less time than they think. And imagine what it would be like if you had absolutely no payments!!
Let me tell you from first hand experience…it’s a wonderful thing. Debt freedom – there’s nothing else quite like it.
(Oh and by the way, there’s a debt snowball printable chart too! Check it out below!!)
Not Liking Your Numbers?
Let’s say you’re one of the few that isn’t really loving what you’re seeing. Maybe, based on your inputs, you won’t be able to clear your debt load for 4+ years. That’s a long time…and quite honestly, you probably won’t make it that long…!
But perhaps there’s still something that can be done. Maybe there’s a way to speed up the process.
Take a look at the suggestions below. With these, you might be able to add more money to your monthly snowball, which could reduce your payoff time by probably much more than you would have expected!
How to Add to Your Extra Monthly Payments
There are sample numbers in the file you just downloaded. According to the file as it stands, this fictitious person had seven debts and was able to pay $200 up front to get their snowball rolling, and then an extra $300 a month to consistently snowball them and pay them down rather quickly. Based on this debt snowball calculator set up, they’d be completely out of debt in 13 months.
No too shabby, right?
But what if they could find some money to add to those monthly payments?
What if, instead of $300 extra a month, they could find $650 a month? What would the impact be on their debt-freedom date?
If they found those additional dollars, they could be debt free, not in 13 months, but in just 8 months!
It’s amazing what an extra $350 can do.
Start playing around with your free debt snowball excel download
- What if you put an extra $200 toward your debt each month?
- How about an extra $500?
- What if you could find another grand every month?
The more you start wondering, the more ways you’ll find that will make it possible. Dream big and you could win big!
How to Find Extra Money Per Month to Use Toward Your Debts
Here’s some ideas I used when I was paying down my debts.
1) Cut your expenses
No matter who you are, there are expenses you can cut.
- Cell phone payment and service (many of us could downgrade our cell phone AND our service and not die in the process)
- Car payments (sell your car, buy a cheaper one)
- Entertainment (travel/sports/events)
- Memberships (yes, exercise is important, but you can run and do push-ups for free)
The list could really go on and on.
The only true needs you have are groceries, utility bills, mortgage, clothing (which you probably already own), basic internet and cell phone, and a basic vehicle with no payment on it. Beyond that, all you’re paying for are wants.
Here’s a great article I wrote a few years back if you want to cut your expenses in half. It’s a bit radical, but it will certainly help you get rid of your debts in a hurry!
Sometimes, there’s only so much money you can cut.
If instead, you can scrape out a few hours at night or on the weekend to get some work in, you could pretty easily earn an extra $400 a month.
If you put some effort into it, you could probably get up to $1,000 or more!
When I was scraping for dollars to get out of debt, I…
- built some furniture (like, not-so-great-looking shoe boxes – but they still earned me money!)
- mowed lawns
- wrote articles for bloggers
- and I kept doing my best to make money blogging
Besides this, there are plenty of other ways to make additional income. The easiest of which is to find a part-time job (bar-tending, serving, or delivering pizzas are great options).
If you want some other options, check out these resources that my team has recently written:
- 9 Best Side Hustles for Teachers
- 10 Flexible Side Hustles That Can Fit With Any Schedule
- 10 Side Hustles You Can Start This Weekend
- 36 Side Hustles You Can Start Now to Earn More Money
- How to Find High Paying Side Hustles: Work Less and Earn More!
- 10 Best Side Hustles for Introverts
- 40+ Side Hustles That Anyone Can Do
- 50+ High-Paying Side Hustles for Single Moms
3) Ask for a raise at work
This one is never the easiest, but if you know your value and you aren’t being paid what you’re worth, then it’s time to bring that fact up to your boss. Don’t do it cruelly or snarkily… Put together a few pages of back-up for your reasoning.
Your support could be:
- different career websites that describe your job in your area with a higher range of pay than you’re currently receiving
- a record of revenue or savings that you’ve consistently brought to the company
- your list of experiences, education, and leadership qualities that you bring to the table
Whatever the case may be, if you present a well-thought-out picture of what you think you’re worth to your employer, chances are that they’ll honor you with a raise. If they don’t, then perhaps it’s time to look into option #4 below.
Looking to improve your debt snowball picture?…
It’s always easier to stick with your current employer, but if it’s never felt like a good fit or if they’re not paying you enough, then maybe it’s time to see what else is out there!
Heck, I love where I work, but I still entertain other opportunities once it a while! Almost all of them fail my qualifications early on, but it’s possible that my dream job is sitting out there for way more money. I’d hate to miss an opportunity that was ripe for the taking.
Keep your eyes and ears open. It’s possible that you find a job that will pay you thousands (if not tens of thousands) of dollars more per year.
If you’re looking more seriously, then start looking into Indeed and let your friends and family know that you’re looking for a change. You never know what opportunity might pop up when you start putting yourself out there!
How to Increase Your One-Time Start-Up Payment
Still want to pay off your debts faster and improve the results of that free debt snowball calculator? Then perhaps it’s time to give it a jolt – ie. a huge wad of cash to get the debt snowball rolling!
Here are my suggestions…
We all accumulate stuff over time. Many of us have plenty of junk that we don’t need and haven’t used for years. If you’re really serious about getting out of debt, it’s time to part ways with it.
Go through this exercise.
- You already put all your debts in the tool, right?
- And you weren’t satisfied with the results?
- What if you were able to sell some stuff and put that money immediately at the debt (in the “one-time start-up payment” amount)?
Think about it right now.
What are three items that you could sell and get a pretty hefty amount for?
How many dollars would this give you in total? Put that amount in the free debt snowball calculator and see what it does to your snowball debt plan. You may be shocked at how much it helps!!
2) Reduce your emergency fund
Dave Ramsey teaches his listeners to cut their emergency fund down to $1,000, and then start paying their debts down with the debt snowball. I am a huge fan of this idea.
If you’re sitting on $10,000 in your savings account, you probably won’t feel all that pressured to get out of debt. Moving that cushion down to just $1,000 will make you feel differently about how to react to different situations.
Have a blown transmission?
Bummer. Well, if you have $10,000 in the bank, then I guess you just replace it for the price you were quoted. A hefty $5,000.
But what if you don’t have $5,000? What if you only have $1,000?
Then you need to use your brain to figure out how to get your transmission fixed for less!
- Maybe you find a solid used one from the junk yard
- And perhaps you install it with a buddy instead of paying the expensive mechanic costs!
The $1,000 emergency fund keeps you from having to pull out a credit card to pay for every emergency, but it’s small enough to keep that sense of urgency on your debt payoff. It’s not overly comfortable to have just $1,000 in the bank, so you’d better work hard and get that debt paid off so you can build up a nice cushion again (3-6 months of expenses)!
If you had a big emergency fund…
Do you currently have consumer debt, but you also have a healthy emergency fund? Perhaps it’s time to get that debt snowball rolling by shelling out some of that emergency fund and laying it down immediately on your smallest debts! Use the debt snowball calculator to see how big of an impact this will have!
If you haven’t already, download the free debt snowball tool!
This always seems to be a question from my readers. “Hey Derek, I have about $60,000 of equity in my house. If I sold it, I could take that equity and pay off all my debt! It’s a great idea right?”
If you want the long answer, here’s a recent post I wrote: “Should You Sell Your House to Get Out of Debt?”
If you want the short answer, most of the time I’d say, “No.”
I mean, you can sell your house and it will allow you to pay off your debts, but then what are you going to do?
- Buy another house that’s just as expensive as your current house?
- And then take out a mortgage for more than you currently had?
That’s called shifting the debt…not paying it off.
You could rent for a bit, but then the cost of housing is going up while you’re putting your money toward rent (ie. a money sink-hole).
Also, if you pay your debt off by simply selling your house, you won’t really feel the pain of paying it off…which means you’ll likely go right back into debt again.
As long as your mortgage is reasonable (less than 25% of your take-home pay), then it’s often best to keep the house and battle your way through your debts.
The Free Debt Snowball Calculator – Your New Beginning
I’m so excited about this tool (which is why I keep updating it and making it better!). It’s already helped thousands of people and now it’s landed in your hands.
All in all, it’s one of the simplest snowball debt tools out there!
- Enter your debts
- Play around with the monthly additional payments and the one-time start-up payment
- AND THEN TACKLE YOUR DEBT WITH A VENGEANCE!
It’s inspiring to see how quickly your debts could evaporate. All you needed was a simple tool and a plan to get them paid off. It’s time for you to clear these debts, save up a healthy emergency fund, and then grow wealthy. It’s absolutely possible and it CAN happen for you!
Best of luck to you, my friend. Be sure to tell me about your debt payoff journey. I always LOVE to hear from my readers!!
Are you ready to make your snowball debt plan? Open this free debt snowball excel download! It might just change your life!!
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.