The debt-snowball method is a debt reduction strategy. As each smaller debt is repaid in full, the monthly money used to pay that debt is then applied toward making additional payments on the next-smallest debt, and so on until all debts are repaid.
Source: Debt-snowball method @ Wikipedia
- Time Won’t Wait: A Year From Now You May Wish You Had Started Today @ Disease called debt: a blog about getting out of debt and building wealth
Excerpt: Through making extra money and saving every penny, we cleared our debts using the debt snowball method, by clearing the smallest debt first and then using the money that was freed up to pay off the next smallest debt. We started with our overdraft as that was the smallest debt and finished with the last creditor in our debt management plan to whom we owed the most. Clearing those debts one by one was another big motivator!
- How the Debt Snowball Method Works @ DaveRamsey.com
Excerpt: Pay minimum payments on all of the debts except the smallest one then attack that debt with a vengeance. We’re talking gazelle intense, sell-out, get-this-thing-out-of-my-life-forever energy. Once it’s gone, take the money you were putting toward that debt, plus any extra money you find, and attack the next debt on the list. Once it’s gone, take that combined payment and go to the next debt. Knock them out one by one.