
If you're overwhelmed by multiple debts and unsure where to start, the Debt Snowball Method, made popular by Dave Ramsey, can help you gain control and momentum. This method focuses on paying off the smallest debt first while maintaining minimum payments on the others. As each small debt disappears, you move to the next, creating a "snowball" effect that builds motivation and progress.
How It Works ?1️⃣ List Your Debts – Write down all your debts, from smallest to largest (ignore interest rates for now).2️⃣ Pay the Minimum on All but One – Make the minimum payments on all debts except the smallest one.3️⃣ Focus on the Smallest Debt – Throw all extra money at the smallest debt until it's gone.4️⃣ Move to the Next Debt – Once the smallest debt is paid, take the amount you were paying and add it to the next smallest.5️⃣ Repeat Until Debt-Free – Continue this cycle until all debts are paid off!
Example of the Snowball Method in ActionLet’s say you have these debts:
Credit Card A – $500 (Minimum Payment: $25)
Personal Loan – $2,000 (Minimum Payment: $75)
Car Loan – $5,000 (Minimum Payment: $150)
Instead of tackling the largest debt first, you'd pay off Credit Card A ($500) first, putting all extra cash toward it while making minimum payments on the others.
Once Credit Card A is cleared, you roll that payment into the Personal Loan. So now, instead of just $75, you’re paying $100 or more toward the loan.
When that’s gone, you attack the Car Loan with the combined amount of previous payments, helping you clear it even faster!
Why Does It Work?✔ Psychological Boost – Paying off small debts quickly feels like a win and keeps you motivated.✔ Faster Progress – Even if it doesn’t always save the most money in interest, it helps you stay on track.✔ Easy to Follow – No complex calculations, just straightforward execution.
With Caretta, you can track your debts, visualize payments, and stay committed to your financial goals. The key is consistency—stick to the plan, and you’ll see results!