Repaying debts with the snowball method
AmanaFi team · Updated · 1 min read
The snowball method means paying the minimum everywhere, then putting everything you can toward the smallest debt. When it is cleared, you roll the freed sum onto the next. Quick wins keep motivation up.
How to use it
The principle comes down to four moves.
- List all your debts with amount and due date.
- Rank them from smallest to largest.
- Pay what is needed everywhere and add the maximum to the smallest.
- Each time a debt is cleared, roll its instalment onto the next.
Why it works
Seeing a debt disappear quickly gives psychological momentum. The sum devoted to repayment grows at each step, like a snowball rolling.
Its limits
If some debts carry interest or penalties, it may be more efficient to tackle them first. For interest-free debts to relatives, also consider the promised dates. Avoid taking on new debts during the plan.
Frequently asked
What about dates promised to relatives?
Honour them on the agreed date, and warn early if you struggle. Include them in the plan as priority costs.
Put it into practice with AmanaFi
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