Debt Snowball Method

(The weekly series - Pocket Money - where I explain financial basics in fewer than 200 words. Feel free to make suggestions!)

The debt snowball method is a method of paying off debt which focuses on quick wins to keep you motivated.

With this method you make all of your minimum payments each month and then pour any extra cash into the smallest debt until that is paid off. Once that’s paid off, you continue paying the minimums for all of your other debts and pour your extra cash (which now also includes the minimum you were paying for the previous debt) into your next smallest debt. And so on. 

As you knock out each debt, the amount that you pay towards the next one increases like a snowball. 

This isn’t the most financially efficient method but it works because seeing the wins keeps motivation high.

I wrote in more detail about it here. 

Love Eleanor. xxx