Depending on who you hear discussing this method it may be more or less steps, but this how I define the steps:
- Create a list of all of your debts: credit cards, car loans, student loans, mortgages, etc…
- Next to each one write down the total balance owed.
- Re-order these from smallest to largest debts (use Excel or Google Docs to make this simpler.)
Use our debt snowball calculator to help you eliminate your credit card, auto, student loan, and other debts. Easily create a debt reduction schedule based on the popular debt snowball strategy, or experiment with your own custom strategy.
The strength of using this method is that it focuses on the behavioral side of personal finance rather than the mathematical. Since we are not robots that always do exactly what we know we should, I recommend this method for most people trying to pay off debt.