If you have debt of any kind, you’re probably interested in finding the best way to get rid of it. The debt snowball method, and its sibling, the debt avalanche method, are ideal ways to pay off multiple debts. Whether you’re paying off student loans, credit cards, personal loans, car loans, or anything else, the debt snowball plan for debt relief is an excellent strategy. Here’s what you need to know to pay off your debt for good with a debt snowball.

What is a debt snowball?

The debt snowball is a debt payoff plan popularized by money guru Dave Ramsey. With a debt snowball, the general idea is to pay as much as you can into your debt each month until it’s wiped out for good.

In a debt snowball, debts are ordered from smallest balance to largest balance. With this method, you make the minimum payment on every debt but the smallest. For that one, you pay as much as you can each month. Once it’s paid off, you move onto the next smallest and so on until you’re debt-free.

What is a debt avalanche?

If you’re a math guru, you might have noticed that the debt snowball doesn’t factor in interest rates. According to the numbers, you’re better off paying down your highest interest debt first, not your smallest balance.

Ramsey argues that the debt snowball is best because it gives you a quick win and motivation to keep going. The economic argument says you should focus on interest rates, not balances, when ordering your debt payoff. While it may take longer to pay off your first debt, you’ll pay them all off faster and save the most money with a debt avalanche.

Benefits of the debt snowball plan

The benefits of the debt snowball plan, or the debt avalanche, are very clear. Either method will help you stay organized and get out of debt. Ignoring your debt or making just the minimum payment each month means it will stick around longer and cost more.

A quick debt payoff can free up your monthly cash flow to save up for a home, a new car, a big trip around the world, or anything else you’d like. When you’re making one or more debt payments every month, it can be tough saving and planning for other financial goals. When you’re debt-free, you can keep your money and use it for anything you choose.

How to organize and track a debt snowball

There are several ways to track and manage your debt snowball. You can try out free apps like unbury.us or unbury.me, or you can use a simple spreadsheet or notepad. Undebt.it offers some additional tools for calculating your debt payoff. Dave Ramsey fans can also use his own web tool from the Dave Ramsey website. What’s most important is that you take action and choose a debt payoff plan you can stick with.

1. List out your debts

The first step in preparing your debt snowball is making a list of every debt. Credit cards, student loans, personal loans, and any other type of debt should be included. List out each account’s interest rate, total balance, and minimum monthly payment so you can pick the right payoff order.

2. Refresh your budget

Debt snowball plans and debt avalanche plans only work when you have extra cash to put toward the top priority account. If you don’t have a budget, this is a good time to start. If you do have a budget, take this opportunity to give it a fresh look. Any place you can save is money you can put toward the debt payoff. Hopefully, you can find places to trim monthly spending to pay off your debt even faster.

3. Chart out a debt snowball action plan

Now that you have your debts listed out and some extra room in the budget for monthly debt payments, it’s time to lay out your debt snowball or debt avalanche. As we discussed above, you’ll want to organize them by balance or interest rate depending on the method you choose.

4. Start your debt payoff

Now it’s time to put your debt snowball action plan to work. Consider setting up automatic payments for the minimum each month on every account so you don’t accidentally miss a due date. Outside of mortgage loans, most loans allow you to make extra payments at any time. With just about any loan, you can add additional payments on top of your regularly scheduled monthly payment. However you choose to pay, make sure to always pay on-time and make at least the minimum payment for each loan.

Anyone can save money with an early debt payoff

Debt freedom is a great goal. Whether you have a small credit card balance or a mountain of student loans, you can overcome it with a focus on your income, budget, and debt payoff plan.

The debt snowball and debt avalanche are tried and true strategies to get out of debt for good. Once you get started, you’ll be on track for a very bright financial future.