1 Simple Trick to Shave Years Off the Dave Ramsey Debt Snowball Method

Kat Tretina Updated on September 27, 2019

Using the debt snowball method can be a smart way to become debt-free quickly. But did you know there's a way to supercharge the debt snowball approach to make your debt disappear even faster?

Here's the trick: Pair the debt snowball method with debt consolidation through a personal loan. You could save hundreds or thousands in interest, and you could wipe away your debt months or years ahead of schedule. We'll show you how this system works. 

What is the debt snowball method? 

The debt snowball method is a strategy for paying off your debt where you start small but gain momentum over time — like rolling a snowball along the ground and picking up more snow as you go. Eventually, you'll have a giant snowball. 

Here's how it applies to debt payoff:

  • You list all of your debt obligations, from the one with the smallest balance to one with the largest balance.

  • Then, you continue making the minimum payments on all of your debt, but you put whatever extra money you can afford toward the debt with the lowest balance.

  • When the debt with the smallest balance is paid off, you roll the minimum payments and the extra you were paying toward that account toward the debt with the next smallest balance.
  • You continue this process until all of your debt is eliminated. So every time you wipe out one account, you apply those resources to the next account. 

The idea behind the debt snowball method is that paying off the smallest balances first — rather than tackling the debt with the highest interest rate — will help keep you motivated. You’ll see results more quickly, empowering you to stay on track. 

How to accelerate your debt snowball

One downside to the debt snowball method is that you’ll pay more in interest fees than if you paid down the debt with the highest interest rate first. To minimize that issue, and to pay off your debt even earlier, you can combine the debt snowball method with debt consolidation. 

When you consolidate your debt, you take out a personal loan and use it to pay off your high-interest debt, such as your credit cards or medical bills. (You can consolidate student loans, too, but that’s a very different process, and they can’t be combined with a personal loan.) Then, you'll apply the debt snowball strategy to your new, lower-interest personal loan. 

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Just how effective is debt consolidation? Let’s say you had $10,000 in credit card debt with an APR of 17.14% — the national average, according to the Federal Reserve. If you had a minimum payment of $250, it would take you four years and nine months to pay off your card balances. Worse, you’d repay a total of $14,750. Interest charges would cost you $4,750 — adding nearly 50% to your original balance.

But let’s say you took out a personal loan, and qualified for a loan with a three-year repayment term at 7% interest. Your monthly payment would be $309 per month, but you’d pay off your balance 21 months earlier. And, you’d repay just $11,116. Consolidating your debt with a personal loan would help you save over $3,600 and help you become debt-free much sooner. 

Using the debt snowball method along with debt consolidation is a powerful way to pay off your credit card balances ahead of schedule. 

Applying for a personal loan

When paired with the debt snowball method, consolidating your debt with a personal loan can be a smart way to become debt-free much faster and save money.

If you’re thinking about taking out a personal loan, we suggest checking out the current offers from Citizens Bank. We like Citizens for their low interest rates, painless approval process, and the quick distribution of funds. Bonus: They also offer several discounts, which knock down your interest rates even further. 

 

Published in: Personal Loan

About the Author
Kat Tretina

Kat Tretina is a freelance writer based in Orlando. Specializing in personal finance, she is focused on helping people pay down their debt and boost their incomes. Her work has been feature din publications like The Huffington Post, Entrepreneur, and U.S. News. Read more by Kat Tretina

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