For anyone searching Google for “methods to get out of debt” you have no doubt turned up various methods to pay down your balances. One of the most popular debt reduction strategies is the “snowball method for paying off debt.” If you believe what you see on the internet, you would think this is a grand and complicated scheme that can only be imported to a select few. Headlines such as “Top Financial Advisor’s Five Secrets to the Snowball Method” or “Real Financial Secrets: Getting Out of Debt with Financier’s Secret Method.”

It just goes to show that some people will claim esoteric knowledge that really isn’t esoteric.

The snowball method for paying off debt is simple, and I’m going to break it down.

Snowball Method Method for Paying Off Debt: Now with Science!

The snowball method for paying off debt is not new, but it is wildly successful. The idea is to focus on paying off the smaller balances first instead of tackling big balances with higher interest rates. This has actually been a subject of academic study, including a study from Northwestern University’s Kellogg School of Management. The information was provided by a debt settlement company on 6000 clients who had successfully eliminated their debt and was analyzed by two assistant professors of marketing. What the study boils down to is that people who went after the “small victories” first were gradually able to eliminate their entire debt balance.

Minimum Payments are a Treadmill

Is that surprising to you? It shouldn’t be.

Minimum payments are essentially running at top speed just to stay in place, and with enough minimum payments going out, you can expend large amounts of money to get effectively nowhere when it comes to paying down debt. Because of this, you can’t come up with larger numbers to take out the big balances. However, by paying down the smaller balances and then paying them off eventually free up more cash and are better able to tackle the next highest balance. Once the next highest balance is paid off, you will be two minimum payments lighter.

● Let’s call the balance #1’s minimum payment $35.00 a month. Paying it off a little faster than the minimum saves you interest payments and gets $35.00 a month off the worry plate.

● Moving on to balance #2’s minimum, let’s call that $50.00 per month. Add to the minimum the $35 that you are no longer paying to balance #1 plus whatever extra is feasible.

● Once balance #2 is paid off, start on the next highest debt, call it balance #3 with a minimum payment of $80.00 per month. You are now $85.00 lighter in terms of outgoing minimum payments and can better than double your payment on balance three – paying it off in half the time.

● When you move on to balance #4, you are really snowballing. Just like a snowball rolling downhill, each time you pay off a balance, you roll that former payment into paying down the next balance!

All the Buts!

This approach might make conventional wisdomers go batty. In theory, paying down the highest balances (also called the avalanche approach) with the highest interest rates first saves time as well as money. However, when you are looking at a complex debt picture with more than one type of debt and a large number of minimum payments due, these small victories using the snowball method of paying off debt can help you see your progress. When dealing with the complex debt picture, these small victories are vital not only to your financial health but your mental health. When you can see progress were not tempted to give up. Progress is its own motivator.

The Snowball Method for Paying Off Debt: Is It for Me?

Figuring out which debt repayment method to use is tricky. Whether you use the snowflake method, the snowball method, or the avalanche method, you need to sit down and go over your finances exactingly. It also requires discipline to put the minimum payments for retired debts against the next balance that comes up on the roster. This can be difficult to do if you’re having problems eating all of your obligations, which includes but is not limited to buying groceries, paying utility bills, covering childcare or transportation expenses, and keeping a roof overhead. When in debt, the financial picture is rarely crystal clear. For this reason, getting an outside set of eyes on your financial circumstances may be the best option for deciding to pursue a given repayment scheme.

A good way to start figuring out if this is the to go to NerdWallet’s debt snowball calculator. Get your paperwork together, and get ready to put in account names, balances for all your debts, and interest rates. It’s a great way to understand your overall debt issues and to see if you need something more than an article on a blog or professional help in getting on top of your debts.

Getting Help

Being in debt can be overwhelming and demoralizing. You feel lost and can’t seem to make any headway against the ever-rising bills. Minimum payments and minimum payments go, but there you are with every month just the same as the last one as you try to make ends meet and cover your obligations. Lots of people are in these very same circumstances, but they let shame stop them from getting help when they most. Sometimes all it takes is an outside set of eyes to help put together an effective and realistic debt repayment plan.

A personalized debt repayment plan can be a combination of consolidation loans, the snowball/snowflake/avalanche method for paying off debt, debt negotiation, and settlement, and other methods. You may know Van Horn Law Group as bankruptcy specialists, but that’s only one part of what we do. We like to think of ourselves as debt specialists, helping people with student loans, medical bills, bankruptcy, and other situations where expert help is needed. We have offices in West Palm Beach and in Fort Lauderdale, and we stay open seven days a week. Bring your debts and troubles to us and let us help you get them under control.