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How Do I Use the Debt Snowball Method?

September 24, 2019

Tip of the Week

Consider the snowball method for paying off your debt, starting with the smallest debts and working your way up.

1 min read

Sometimes being in debt can feel overwhelming.  You may feel like your drowning as you pay off your student loans, credit cards, automobile, and other loans. It’s important not to get discouraged. Take action instead! One way to do that is to use the snowball method of paying off loans. It’s designed to give you confidence by paying off small debts first.

Jargon Hack

What is a creditor?

Creditor

A person or financial institution that lends you money

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Tactics and considerations

Jargon Hack

What is a balance?

Balance

The amount of money you owe a creditor for a loan

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Examples

You have four loans:

1) A credit card loan with a balance of $1,000
2) A car loan for $5,000
3) Student loans for $15,000
4) A mortgage for $150,000

Pay off the $1,000 balance first (credit card loan balance). Next pay off the car loan. Then focus on the student loans, and finally work on the mortgage.

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By Stash Team

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