Managing debt is a normal part of the modern financial journey. But as interest rates surge along with historic levels of credit card debt, many households are feeling stressed by increasing monthly payments.
If you’re hoping to reduce your debt and interest fee payments, it’s worth considering the snowball approach.
How the debt snowball method works
The debt snowball method is one of the most effective debt payoff strategies. It’s designed to help you start small and gain momentum over time until you are debt-free. Here’s how it works:
Here’s an example of the debt snowball method in action:
Using the debt snowball method, you would pay off your medical bill first. Then, when that was paid off, you’d take the money you were using towards your medical bill and apply it to your credit card bill. Then, you’d focus on your monthly auto loan payments and finally your student loans.
Studies show that small wins are the single most important factor in accomplishing a hard task. These small wins are built into the snowball method, which is why it is so effective.
Trying to pay off $98,814 in debt is daunting, but paying off $1,766 doesn’t sound so bad.
A study from the Kellogg School of Business at Northwestern University found that consumers who used the snowball method paid off their debt faster. And three large field experiments based on actual credit card data published in the Journal of Consumer Research found “focusing on paying down the account with the smallest balance tends to have the most powerful effect on people’s sense of progress – and therefore their motivation to continue paying down their debts.”
By the time you’re ready to attack your largest debt, it will feel achievable. And before you know it, debt freedom will be yours.
Also consider the avalanche debt payoff method
While more people have success with the debt snowball method, the avalanche payoff approach is the best option mathematically.
Using this method, you pay off the debt with the highest interest rate first, regardless of how much you owe.
In the example able, you would pay off your credit card debt first, because it has the highest interest rate. You’d then direct your attention to your auto loan, student loans, and finally your student loan.
Free Debt Snowball Spreadsheets for 2024
A spreadsheet is one of the most helpful tools for planning the best debt payoff strategy for your situation. So here are some of the best free debt snowball spreadsheets for Google Sheets and Excel. Note that some of these help you evaluate the avalanche method as well.
Browse debt snowball spreadsheets:
Debt Snowball Spreadsheet for Google Sheets
The Tiller Community Debt Snowball Spreadsheet allows you to calculate estimated payoff dates and track your progress toward debt freedom.
You can use this sheet to switch back and forth between the avalanche and debt snowball methods.
Graphs will help you compare the two strategies side by side. The spreadsheet can be used for any type of debt.
This template is free for everyone, but it’s designed to work best for spreadsheets powered by Tiller.
Debt Snowball Template from TillerIf you already use Tiller, you know it’s the fastest, easiest way to manage your financial life with the flexibility of a spreadsheet. Tiller automatically updates Google Sheets and Excel with your daily finances, including all your spending, account balances, and current debts and liabilities.
Debt Payoff Calculator for Google Sheets
Use the Debt Payoff Calculator for Google Sheets to plan the best debt payment strategy for the fastest payoff based on your current financial situation.
Get the Debt Payoff CalculatorDebt Snowball Spreadsheet from Reddit
This is a simple, 12-month debt-tracking spreadsheet that can help you track a snowball or avalanche strategy. It’s a good starting template for further customization.
Learn more and read comments about this template.
Open the Google Sheet PreviewDebt Reduction Calculator for Excel
Not a debt snowball spreadsheet, this simple credit payment calculator template can help you calculate the amount of money you must pay each month to fully repay your debt. You can also view the monthly payment amount and the total interest paid if you make extra payments. You can use this tool to change your repayment plan and see how much longer it will take you to repay your loan.
Payoff calculator for ExcelMoney and Budget Snapshot for Excel
While this simple Excel template isn’t a debt snowball calculator, it can quickly give you an idea of what you can afford to pay toward your debt after budgeting for your big living expenses. (Here’s a free Google Sheet version.)
Money and Budget SnapshotDebt Reduction Calculator for Google Sheets and Excel from Vertex42
The Debt Reduction Calculator from Vertex42 is a spreadsheet that gets a little more intricate. The first page allows you to input your debt and select your payoff strategy: Snowball, avalanche or stair-stepper – the last of which is a unique combination of the snowball and avalanche methods.
If you choose the snowball method, there is a handy chart that will show you your projected progress. There is no such chart for the avalanche or stair-stepper method.
Whichever method you choose, there will be a separate tab where you can log your payment schedule.
For Microsoft Excel (2010 or later)
For Google Sheets
https://simplew.kinsta.cloud/debt-snowball-spreadsheet/
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