Debt Snowball Calculator: Is It the Best Way to Pay Down Your Debt?

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One of the most widely used debt payment strategies is the debt snowball method. By ordering debts from the smallest to largest balance, the debt snowball strategy encourages you to build momentum by putting extra funds toward paying off the smallest debts first, regardless of the interest rate.

To decide whether the snowball method is the best solution for you, you might want to calculate how long it will take you to pay off your debt using the method. We’ll explain how.

What is the debt snowball method?

Imagine a snowball rolling downhill. It gets larger and larger and starts getting some heft to it. Soon, it becomes so large that it becomes unmanageable. Unfortunately, that’s what many folks imagine when they’re faced with overwhelming debt. However, the debt snowball can work in just the opposite way. Instead of your debt increasing in size, imagine your ability to pay off balances accumulating.

The way it works is fairly simple.

  • You continue to make minimum payments on each account, except the one with the smallest balance.
  • Next, figure out how much more than the monthly minimum you can afford to pay on the smallest balance in order to eliminate this debt first.
  • Continue putting extra disposable income toward the smallest debt until it’s paid off.
  • From there, take whatever funds you were putting toward that smallest debt and put them toward the next debt on your list.

Paying extra money toward your smallest debt should get you closer to eliminating that debt faster. As you pay off an account, your "snowball" grows larger. The monthly payment you were making to pay the smallest debt can now be used to increase your minimum payment on the account with the next highest balance. Eventually, you should start seeing some relief from excessive debt as each account is paid off.

How to use a debt snowball calculator

To make the debt snowball really work in your favor, you’ll need to understand how to use a debt snowball calculator. Start by making a list of debts. Here’s what you will need to note:

  • The remaining balance. This is the total amount you owe to the lender, including any interest that may have already accrued.
  • The minimum payment. This is the lowest amount you can pay for the month or billing cycle to avoid additional fees or penalties.
  • The payment cycle and due date. Generally, debt accounts are due monthly, but it’s important to note if your cycle is different — maybe bimonthly or quarterly. Keep track of exact due dates so you know what to pay and when.
  • The interest rate. In the U.S., this interest rate is noted as the APR. It calculates the monthly interest rate on an annual basis.
  • Account type. Take note of whether each debt is a credit card account, loan or other.

This is where having an accurate monthly budget already written down really helps. Once you’ve come up with a good budget, you should be able to pull some of the information from it to use in your debt calculator. This is also a good time to have monthly credit card and loan statements handy. Now, suppose you’ve determined you have the following outstanding debts:

Type of DebtBalanceAPR
Credit Card$35012.85%
Credit Card$42513.99%
Personal Loan$7508.25%
Store Credit Card$82522.99%
Personal Loan$1,20014.75%
Credit Card$1,62518.50%
Total Debt: $5,175

After analyzing your household budget, you determine that you can make $50 minimum payments toward the five largest debts, and you are able to pay $75 per month toward the $350 credit card debt. That means you have $325 per month to allocate across all your debts.

If you keep making steady payments, by the end of the fifth month, you should have paid down the smallest debt and can now "snowball" that extra $50 toward the next highest debt. When the first and second debts are paid, you should have $125 you can snowball toward the third debt, and so on.

You can create a rough debt snowball calculator in Excel. First, use a credit card payoff calculator to estimate the total cost of the debt, with APR, if you only made the minimum payment you can manage. This will inflate the cost of interest slightly, but that just means you’ll pay it off faster than you expect.

Add all the payments on a particular account in the column to see how they are adding up and to help you track when the debt will be completely paid off. You can also add each row to total your payments during a month and make sure you’re hitting your target for debt payments.

Some people are comfortable using tables in a notebook or an Excel spreadsheet to visualize how the debt snowball method works. If you’re not comfortable creating tables and spreadsheets yourself, there are free online resources available. A quick internet search will turn some up.

Example of the debt snowball method

The chart below will give you a general idea of how the snowball method works. The borrower is making $75 monthly payments toward the lowest debt and $50 toward the others. Once the first credit card debt is paid, notice how the now available $75 snowballs to pay the next highest debt. These examples include a rough estimation of APR.

Credit Card 1 $350Credit Card 2 $425Personal Loan 1 $750Store Credit Card $825Personal Loan 2 $1,200Credit Card 3 $1,625Total Monthly Debt Payment
Month 1755050505050325
Month 2755050505050325
Month 3755050505050325
Month 4755050505050325
Month 5616450505050325
Month 612550505050325
Month 761114505050325
Month 8175505050325
Month 9175505050325
Month 10301955050325
Month 112255050325
Month 1213114450325
Month 1327550325
Month 1427550325
Month 15187138325
Month 16325325
Month 17325325
Month 18325325
Month 19325325
Month 20134134

Should you use the debt snowball method?

The debt snowball method of paying down debt is generally good for borrowers who are motivated to pay down debt using a structured system whereby they are willing to commit to paying smaller debts first, as opposed to paying debts with the highest APRs first. It’s also good for borrowers looking for quick victories toward paying debts. But the debt snowball method may not be best for everyone. If you have lots of open credit accounts with high balances and high interest rates, you could wind up paying a lot in interest on those accounts since you are attacking them last.

If that is your situation, it doesn’t mean the snowball method is out of the question. Rather, you might want to take some steps to minimize interest charges before tackling your debt with this approach. For example, if you are swamped with high-interest debt, you could try getting approved for a balance transfer credit card with favorable rates. Another option is to try to get approved for a personal loan and consolidate your debt, also with a favorable interest rate if possible.

If you are stuck with high-interest debt, try putting your monthly budget under a microscope. Are you able to eliminate expensive cable bills or cut down on food costs or travel expenses? Look for ways to squeeze as much money out of your budget as possible so you can increase your debt payments and alleviate the burden of high-interest accounts as quickly as possible. Or, alternatively, you might consider the debt avalanche method.

Debt snowball vs. debt avalanche method

The debt snowball and debt avalanche methods are both designed to achieve a common goal, which is to provide a structured method for you to pay down debt by sticking with each strategy over time. But that’s where the similarities stop.

Whereas the debt snowball method attacks debt from accounts with the lowest balance first, regardless of APR, the debt avalanche method looks at accounts with the highest APRs to prioritize eliminating those debts first. Each method has its pros and cons, and may not be right for everyone.

The debt snowball method can be more motivating because you’ll likely see quick victories in a relatively short amount of time. However, you may continue to accrue a significant amount of debt on the accounts with high APRs, especially if they have high balances.

The debt avalanche approach may be good for people who have more available funds on hand to pay high-interest debts first because they’ll typically allocate more money each month to save money on high interest rates over time. This method may also require more commitment because it might take more time to pay down debt, and there are no quick victories to provide motivation.

Whatever method you choose to tackle debt, your goal should be to remain steadfast and committed because eliminating debt takes time.

Keep accurate records and savor the small victories as you make your way toward freedom from debt.

Justin is a Sr. Research Analyst at ValuePenguin, focusing on small business lending. He was a corporate strategy associate at IBM.