Which Debt Snowball is Best for You?

by Joe Plemon on August 31, 2011

Creating a debt snowball is a great way to reduce your debt, but not all snowballs work the same way. As you read about these, ask yourself, “Which one is best for me?

The behavioral snowball

This system (paying debts from smallest to largest) provides quick victories by paying off small debts first – victories which inspire the user to pay off even more debt. As debt diminishes, enthusiasm increases … thus the term “behavioral” snowball. Here is how it works:

1. List all of your debts from smallest to largest.
2. Make minimum payments on all of the debts except the smallest.
3. Pay all you can on the smallest debt.
4. Once you experience the victory of getting that smallest one out of your life, roll what you were paying on that one into the next smallest, and continue paying minimum payments on the rest. Your debt snowball is now rolling.
5. Continue this process until all debts are gone.

The mathematical snowball

This technique (paying debts from highest interest rate to smallest) is mathematically the most efficient way to reduce debt. Those who are motivated by getting rid of those high interest debts will benefit from this technique. It works like this:

1. Tabulate all of your debts by interest rate — from highest to lowest.
2. Make minimum payments on all debts except the one with the highest interest.
3. Pay all you can on the highest interest debt.
4. Once it is gone, roll that payment into the next highest interest rate and continue making minimum payments on all other debts.
5. Continue this process until you are debt free.

The hybrid snowball

As the name suggests, a hybrid snowball combines the behavioral and the mathematical snowballs. Your goal is to maintain the enthusiasm of getting out of debt while being wise about those high interest loans. As you may suspect, the hybrid is highly personalized; you design it to fit your circumstances.  It should work something like this:

1. Make two lists of your debts: smallest to largest and highest interest rate to lowest.
2. From these two lists, make a new list, placing highest priority debts at the top and lowest at the bottom.
3. As with the first two options, make minimum payments on all debts except the one at the top of the list. Attack it with vigor until it is gone, then move on to the next one.

Some thoughts about the hybrid snowball:

  • If you have small debts (those which can be paid off in a few months), I strongly recommend you put them at the top of your list. You need that psychological boost of knowing you can get some of these creditors out of your life forever.
  • Be in touch with your emotions. What do I mean by that? If, when examining the list, certain debts REALLY push your hot button (like that “12 month same as cash” television which will cost you a fortune in back charges and interest if you don’t pay it off in the next two months),  move that item up on the list and use that anxiety as a motivator to pay it off.
  • Run the numbers. Yes, this involves some nerdy math skills, but, if the shoe fits, go ahead and run the numbers on different scenarios. Knowing just how much you can save by jumping a higher interest debt up in the order could help you better plan your attack.
  • Stay flexible. This is YOUR plan. If you find yourself getting bogged down on a higher interest debt, consider switching to a smaller one to regain your momentum.

Word to the wise: Do not start any snowball until you have done the following:

Create a budget.

I can’t emphasize this enough. If you think you can get out of debt without using a budget, you are fooling yourself. Your budget is your friend; it will not only tell you where your money is going; it will also tell you how much of your money you can use toward debt reduction. Whatever snowball you choose, it won’t roll without a budget pushing it.

Set a time goal.

A time goal moves a snowball from theory to reality. If, based on your budget, you can project being debt free in 24 months, you will be more apt to stick with it. Put a 24 month calendar on your refrigerator and mark a red X through each month as a countdown to freedom.

Work together.

If you are married, working as a team is absolutely essential. One highly motivated spouse trying to control an “I don’t care” spouse is a formula for frustration and defeat. If you are the highly motivated one, you might want to take some “patience pills” until your less than motivated spouse is ready to partner with you in attacking the debt.

Stay angry.

I hope you are angry…very angry…at this debt. Visualize it as a satanic enemy trying to rob you of your joy, your freedom and your future. Personalize your enemy. Tell him, “You’re going down!” Weird?  Perhaps.  Effective?  You bet.  Learn his tricks and his tactics, for when you know your enemy, you will be more apt to defeat him.

Which snowball is best … and worst?
I titled this post “Which debt snowball is best for you?” Hopefully, my explanations have helped you understand how each works. Is one best? Yes. The one which works for you. The worst one is the one you never try. Don’t let that happen.

Now: get that snowball rolling!

Readers: Have you used one of these snowballs … or one I didn’t mention?  How did it work?  Any additional tips?


{ 4 comments… read them below or add one }

George August 31, 2011 at 6:06 pm

I recommend starting with the “behavioral snowball” … then maybe I’d move something up the list based on emotional factors. Rarely does the math make enough difference in the long run – except for the “nerds” in the group that can’t let go of the analysis and live a little.

Ramsey says it’s 20% knowledge and 80% behavior.


joeplemon September 1, 2011 at 3:25 pm

George — I too recommend the behavioral snowball. In fact that is the one I used to get out of debt. Being an engineer, I understand the math, but I am more motivated by those victories than tabulating the numbers.

Dave Ramsey also said, “If you REALLY understood the math you wouldn’t be in the mess you are in.”


Liz September 1, 2011 at 6:59 pm

Love your description of the hybrid snowball debt banisher. My answer would have been behavioral snowball until reading your description of the hybrid. That one rings bells for me.


joeplemon September 2, 2011 at 8:46 am

Liz…Good! Personal finance is called personal finance for a reason: what works for one will not necessarily work for another. Are you planning on trying the hybrid? If so, let me know how it goes.


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