What Is Debt Snowball? Meaning & Example
Definition
The debt snowball method pays minimums on all debts and puts extra money toward the smallest balance first. Quick wins can help build motivation.
Related terms
The debt avalanche method pays minimums on all debts and puts extra money toward the debt with the highest interest rate first. It typically saves the most interest.
BudgetA budget is a plan for how you will spend, save and invest your income. It helps you direct money toward your priorities instead of wondering where it went.
Net WorthNet worth is the value of everything you own minus everything you owe. Tracking it over time shows overall financial progress.
What is Debt Snowball?
The debt snowball method pays minimums on all debts and puts extra money toward the smallest balance first. Quick wins can help build motivation.
Can you give an example of Debt Snowball?
Paying off a $400 store card before a larger loan gives an early success that keeps momentum going.