Mastering the Debt Snowball Method

Without a doubt, debt is something that we normally wouldn’t like. It is a weight that seems to drag us down no matter what. However, as much as we would want to avoid debt, it is often a necessary thing which is why we incur them from time to time. If we let things go out of hand though, the accumulated debt might be overwhelming. So we need to find a way to manage our growing debt. One great idea is to master the debt snowball method.

Learning the Debt Snowball Method

The debt snowball method might be something that sounds totally foreign to us. The idea is actually very simple and would appeal to a lot of people, regardless if we have a background in finance or not. It’s done by simply making a list, from the smallest debt to the largest, and then paying off the smallest debt first before moving on to the next. The minimum payment is made in the meantime to the rest of the debt that is in our list.

Logical thought might dictate that we should pay off the largest amount of debt first because this would incur the highest interest or that we look for the debt with the highest interest rate to cut down on cost. However, the debt snowball method does not follow this train of thought. Rather, it targets our emotions and how we feel about paying off debt.

  • We can more easily pay off smaller debt than the ones with a higher amount 

While we may like the idea of being able to pay our debts all at once, it is rarely possible to do so. We might be able to pay off only a certain amount to each of the different credits that we owe. Paying off each of our debt this way would take a longer time since we are not concentrating on a particular debt.

The easiest and fastest debt to pay off would certainly be the smallest one. While logically it may make more sense to pay off the ones with the higher interest rate, those debts could be the ones that would take the longest to pay off. So we might as well start small and pay off the ones that we are capable of.

  • Paid off debt encourages us to pay off others 

One of the ways to encourage ourselves is to see that it can be done. Paying off the smallest debt is a feat that we can more easily manage. Once we finally see that our debt balance is zeroed out, we can feel more confident moving on to the next one because we know that it is possible.

  • By concentrating on paying off a certain debt, we get to save more 

When we do not make full payments to each of our debts, we sometimes get too lenient and not focus on the end goal which is to pay it off. So we could just be making perpetual payments that would not really pay off any of our debts in the future. This is usually where credit problems stem from. By focusing on paying off one debt at a time, we can urge ourselves to save more in order to pay it off because we have a clear goal set in mind.

  • We get a certain sense of satisfaction and achievement when we pay off debt 

Milestones often give us the encouragement we need in order push further. If we focus on the debt with higher rates, being able to pay them off or even reaching close to the mark might be a really long way off. We do not really reach any milestone that would give us the certain sense of satisfaction to make us want to do more. Whereas by focusing on the smaller debt, we get to pay them off more easily and quickly which can give us a good overall feeling.

By mastering the debt snowball method, we feel more motivated to pay off all our debts. While it may not be the most logical method, it does appeal to us more because of how we feel overall once we pay off a certain debt. Anyway, if we did follow the logical way all throughout our lives, we probably wouldn’t be in such dire straits and be up to our necks in debt. So we have to find a way to manage debt the best that we can and at the same time doing so in a way that gives us the most satisfaction.

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