Debt Reduction - Snowball Method
Debt Reduction Snowball Method What is the Snowball Method The Debt Reduction Snowball Method is a strategic plan to reduce or pay off their debt that follows a simple emotional process. The Snowball Method directs the consumer to pay down their consumer debt using the smallest balance first. For example, using this method a consumer would review his/her debt accounts and list them in the order he or she wants to pay them off. The lowest debt would be first (#1), then the second (#2) and so on, with the highest debt being the last on the list. In creating this chronological pay-off list, the consumer would not take into consideration the interest rate assigned to the debt. Following this manner allows the consumer to more quickly feel a sense of accomplishment (a win!) during their debt reduction process. Smaller debts are paid off and emotionally the consumer feels a sense of momentum building. This feeling increases the chances that the consumer will stick with the ...