All You Need to Know About the Snowball Method That Helps People Become Debt-Free

Clearing off credit card debts and paying back loans are major steps towards achieving financial stability and becoming debt-free is more important than ever before when people are struggling to save money. Among different strategies recommended to achieve debt-free status, the snowball method is one that allows people to knock off those smaller sitting debts, which gives them a sense of achievement and motivates them to clear the burden entirely. A TikTok user (@caleowen) posted a video amassing 24.4 likes that focused on this method devised by financial advisor Dave Ramsey. He starts the video by informing about the snowball effect and says, "You pay off the smallest debt first and you pay the minimum payments on the other ones to make sure no interest is being accrued." Adding to his explanation he adds, "Then you take the same amount of payment that you were applying to the smallest debt and then you add that on top to the next debt. And then if you have more debt, you take the total combine of that, add it on top to the next one."

In the later clips, he explains, "It's the 'snowball effect' where you pay off the smallest then you to the next but you keep rolling over the payments onto the next one. So, the payment actually gets bigger and it pays down faster. You can get rid of debt a lot faster and it's a great way to do it." It's like when you roll a tiny snowball down a hill and it accumulates more snow as it goes, getting larger with time. The success of the snowball method depends largely on your financial situation and goals. Some folks might prefer other ways to pay off debt, like the avalanche method, where you start by clearing the debts that cost you the most in interest.

Viewers had diversified opinions as some of them were really impressed by the method while others weren't so sure if it's the best way to save money in the long run. @FlamingArrow(Taylor's Version) commented, "That's exactly what I'm doing. Paying off my $500 credit card first, then my $4000 credit card, and then finally my $10k personal loan." @WilliamDavidHaynes commented, "Ramsey’s been preaching this for decades. People need small victories to stay consistent and why the snowball works." @Lali Belardo commented, "I do snowball but basically put all my extra money in regardless of min payments. So if I have 1k a month for debt payment, I'll use all of that to pay off my cards."

@Jeremy Laskowski remarked, "Who’s gonna tell him interest is still accrued if you pay the minimum payment." @Jennifer Sellner mentioned, "I love this method. Got mine and my husband's vehicle paid in 2 years instead of 10." @user3626359390333 added, "It works! Once you start taking down debts one at a time, you would see the results. But it requires patience."

But as per @Samwise, it is, "Not the best way mathematically. Good for simple-minded folk. Otherwise highest interest, the largest debt first and the work down. Always." @Joe Clevenstine added, "We are doing a little differently i.e. the highest interest rate and highest payment first,"

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