Debt Snowball Example: Watching $17,100 of Debt Disappear

The debt snowball sounds simple: pay off your smallest debt first, then the next smallest, and so on, rolling each payment into the next one. But it's hard to picture what that looks like month to month until you see it with real numbers.

So let's follow one example from start to finish.

Where we start

Four debts, $17,100 in total. The minimums add up to $490 a month, and our example person can afford $740. That leaves $250 extra every month.

Sorted by balance, smallest first:

The rule from here: everything gets its minimum, and all the extra goes to whatever's at the top of the list.

Months 1–4: the store card

The store card gets $285 a month, its $35 minimum plus the full $250. After the first payment it's already down from $900 to $634. By month 4 it's gone.

It's only $900, but that's one less bill to deal with within four months. For a lot of people, that early result is what keeps them going.

Months 5–13: credit card 1

This is where the snowball part kicks in. The $285 that was going to the store card now goes on top of credit card 1's $95 minimum, so $380 a month.

By now the card is down to about $2,840 from the minimum payments alone. At $380 a month it's paid off in month 13, a little over a year in.

Months 14–23: credit card 2

Roll it again. Credit card 2 now gets its own $150 plus the $380, so $530 a month.

This one's the slog. After a year of minimum payments at 24%, it's still sitting at roughly $4,700. The minimums were barely covering the interest. But with $530 going at it every month, it's gone by month 23.

Months 24–28: the car loan

Last one. The full $740 a month now goes to the car loan, which has quietly been paid down to about $3,300 all this time. Five months later it's done.

Month 28. No debt.

The whole thing at a glance

Notice that the total payment never went up. It was $740 from the first month to the last. The only thing that changed was where the money went. That's all the snowball is.

Was it worth it?

Here's the same set of debts if you just paid the minimums and nothing else:

Almost two years sooner and $3,871 less interest, from $250 a month and paying things off in a fixed order.

You might be wondering whether the avalanche method (highest interest rate first) would've been cheaper. It would, by $98, and it finishes in the same month. I dug into when that gap gets bigger in snowball vs avalanche.

Questions