Accelerate Debt Payoff. What Is the Snowball Method—and Does It Really Work?
If you’re trying to get out of debt, you’ve probably heard of the snowball method. But what exactly is it, and more importantly—does it actually work?
In this video, we’ll walk you through a real-world example of using the snowball method to pay off debt. We’ll even show you how to run the same kind of analysis for your own situation—in just a few minutes.
What Is the Snowball Method of Debt Payoff?
The snowball method is a debt repayment strategy where you:
- Make minimum payments on all your debts except one.
- Focus all your extra money on the smallest debt balance first.
- Once that smallest debt is paid off, you roll those payments into the next smallest debt.
- Repeat the process until all debts are gone.
It’s called the snowball method because like a snowball rolling downhill, your payments grow larger over time—helping you eliminate debt faster and faster as you go.
Real-Life Example: Paying Off $18,000 in Credit Card Debt
Let’s say someone has $18,000 in total credit card debt spread across five cards. Their minimum monthly paymentsadd up to $639. They believe they can add an extra $100 per month toward their debt payoff.
We enter these numbers into our Debt Payoff Calculator at TheYukonProject.com, then click “Calculate All Methods.”
Why Paying Minimums Alone Isn’t Enough
Here’s what stands out first: the red line on the chart. That shows how long it would take to pay off this debt by only making minimum payments—a shocking 17 years and 1 month.
Over that time, they’d pay over $21,000 in interest—more than the original debt and the cost of a used car. Clearly, that’s not the way to go.
The Snowball Method in Action
Now let’s look at the green line—the snowball method. With their extra $100 a month, they can:
- Pay off all $18,000 of debt in just 2 years and 6 months
- Cut their interest payments down to $6,279
That’s a savings of nearly $15,000 in interest compared to just making the minimums!
Can a Debt Consolidation Loan Help?
What if they want to speed things up even more? Let’s explore debt consolidation.
Their average interest rate is 24.3%. A consolidation loan would only make sense if they qualify for an APR of 22.3% or lower.
Using the orange line on the chart, we can see that consolidation with aggressive payments would get them out of debt just 1 month faster than the snowball method—but they’d save an additional $800 in interest.
So while the time savings is small, the interest savings can still be worth it—especially if you get a lower rate.
Want to Check Your Consolidation Options?
If you want to see what kind of debt consolidation loan you qualify for, click the “Apply Now” button on our site. You’ll be taken to our lending marketplace where you can:
- Choose “Debt Consolidation”
- Enter the loan amount and your credit score range
- Compare offers from up to 40 lenders
- Get pre-qualified with a soft credit check (no impact on your score)
Use the Free Debt Payoff Calculator
To try this for yourself, visit TheYukonProject.com and scroll down to find our Debt Payoff Calculator. It’s a quick, easy tool to help you find the fastest and smartest path out of debt.
