Clearing debts: the snowball
Training 465 minutesdebt snowball
You have three debts: a payday loan, a card and a car. The payments choke you. The snowball: close the smallest, add its payment to the next one. The ball grows, debts melt faster.
Training goal: Close two debts
▶ Play this trainingWhat you will learn
- Snowball: smallest debt first, quick wins keep you going.
- Avalanche: highest rate first, it costs less interest.
- A freed payment is never spent, it goes to the next debt.
Your real-life step
List every debt: balance, rate, payment. Run the plan below and see the date you become debt free.
Questions and answers
Snowball vs avalanche: what is the difference?
The snowball clears the smallest balance first, the avalanche the highest rate. The avalanche costs less, the snowball keeps you motivated.
What do I do with a paid-off debt’s payment?
Add it to the next debt’s payment. That is how the ball grows.
How long will it take to get out of debt?
It depends on balances, rates and your extra payment. Run your own plan in "My debts".
More trainings in this module
- Good debt vs bad debt
- APR explained
- Credit score
- How to build credit
- How to get out of debt
- Credit cards and interest
Numbers are illustrative. A game, not financial advice.