How to Use the Debt Snowsquall Method to Pay Off Debt

If you’re struggling with debt, you’re not alone. According to a recent report by the Federal Reserve, total household debt in the United States reached a record high of $14.56 trillion in 2020. But there is hope! One effective strategy for paying off debt is the debt snowsquall method.

What is the Debt Snowsquall Method?

The debt snowsquall method is a debt repayment strategy that involves focusing on paying off your debts with the highest interest rates first while making minimum payments on your other debts. The idea behind this method is that by tackling your most expensive debts first, you’ll save money on interest over time and become debt-free faster.

Here’s how it works:

  1. Make a list of all of your debts, including the creditor, the total amount owed, the minimum monthly payment, and the interest rate for each debt.
  2. Order your debts from the highest interest rate to the lowest interest rate.
  3. Make the minimum payment on all of your debts each month.
  4. Put any extra money you have towards paying off the debt with the highest interest rate first.
  5. Once you’ve paid off the debt with the highest interest rate, move on to the debt with the next highest interest rate, and so on.

By following this method, you’ll be able to pay off your most expensive debts first, saving you money on interest over time.

Why Use the Debt Snowsquall Method?

There are a few key reasons why the debt snowsquall method can be so effective for paying off debt:

  1. You’ll save money on interest: One of the biggest benefits of the debt snowsquall method is that it can save you money on interest over time. By focusing on paying off your debts with the highest interest rates first, you’ll be able to minimize the amount of interest you pay on your debts overall.
  2. You’ll become debt-free faster: Because you’ll be saving money on interest by using the debt snowsquall method, you’ll be able to become debt-free faster than if you were to focus on paying off your debts with the lowest balances first.
  3. You’ll feel a sense of accomplishment: Paying off debt can be a long and challenging process, but the debt snowsquall method can help you feel a sense of accomplishment along the way. Each time you pay off a high-interest debt, you’ll know that you’re one step closer to financial freedom.

How to Get Started with the Debt Snowsquall Method

Getting started with the debt snowsquall method is easy. Here’s a step-by-step guide:

  1. Make a list of all of your debts: Start by making a list of all of your debts, including the creditor, the total amount owed, the minimum monthly payment, and the interest rate for each debt. You can find this information on your monthly statements or by logging into your online accounts.
  2. Order your debts from highest interest rate to lowest interest rate: Once you have a list of all of your debts, order them from highest interest rate to lowest interest rate. This will help you prioritize which debts to pay off first.
  3. Create a budget: To be successful with the debt snowsquall method, you’ll need to create a budget that allows you to put extra money towards your debts each month. Start by tracking your income and expenses for a month to see where your money is going. Then, look for areas where you can cut back on spending and put that extra money towards your debts.
  4. Make the minimum payment on all of your debts each month: To avoid late fees and damage to your credit score, make sure to make the minimum payment on all of your debts each month. This will help you stay current on your debts while you focus on paying off your high-interest debts first.
  5. Put extra money towards the debt with the highest interest rate: Any extra money you have each month should go towards paying off the debt with the highest interest rate first. This might mean cutting back on discretionary spending, taking on a side hustle, or selling items you no longer need.
  6. Celebrate your wins: Paying off debt is hard work, so make sure to celebrate your wins along the way! Each time you pay off a high-interest debt, take a moment to acknowledge your progress and treat yourself to a small reward.

Real-World Example

Let’s take a look at a real-world example of how the debt snowsquall method might work. Let’s say you have the following debts:

  • Credit card A: $5,000 balance, 18% interest rate, $100 minimum monthly payment
  • Credit card B: $3,000 balance, 15% interest rate, $75 minimum monthly payment
  • Student loan: $10,000 balance, 6% interest rate, $200 minimum monthly payment
  • Car loan: $8,000 balance, 4% interest rate, $300 minimum monthly payment

Using the debt snowsquall method, you would focus on paying off your debts in the following order:

  1. Credit card A (18% interest rate)
  2. Credit card B (15% interest rate)
  3. Student loan (6% interest rate)
  4. Car loan (4% interest rate)

Each month, you would make the minimum payment on all of your debts and put any extra money towards paying off Credit card A first. Once Credit card A is paid off, you would move on to Credit card B, and so on.

Let’s say you have an extra $500 to put towards your debts each month. Here’s how your debt repayment plan might look:

  • Month 1: Pay $600 towards Credit card A ($100 minimum payment + $500 extra)
  • Month 2: Pay $600 towards Credit card A
  • Month 3: Pay $600 towards Credit card A
  • Month 4: Pay $600 towards Credit card A
  • Month 5: Pay $600 towards Credit card A
  • Month 6: Pay $500 towards Credit card A (Credit card A is now paid off!)
  • Month 7: Pay $575 towards Credit card B ($75 minimum payment + $500 extra)
  • Month 8: Pay $575 towards Credit card B
  • Month 9: Pay $575 towards Credit card B
  • Month 10: Pay $575 towards Credit card B
  • Month 11: Pay $575 towards Credit card B (Credit card B is now paid off!)
  • Month 12 and beyond: Put the extra $500 towards the student loan until it’s paid off, then put it towards the car loan until all debts are paid off.

By following this plan, you would be debt-free in just over 2 years and would save a significant amount of money on interest along the way.