Debt Snowball Setup
Organize debt repayment by balance to build momentum through progressively eliminating debts.
What Debt Snowball Setup gets you.
By the end of this upgrade you will have every debt sorted from smallest to largest balance with a specific extra-payment amount directed to the smallest debt each month.
- Completed debt inventory with balances, APRs, and minimum payments
- Current monthly income and expense totals
- Bank account or app to automate payments
Run the upgrade.
- 01
Verify balances are current
Confirm every balance and minimum payment on your debt list matches the latest statement for each account.
- 02
Sort debts smallest balance to largest
Reorder your debt list purely by remaining balance, from smallest at the top to largest at the bottom, ignoring interest rate.
- 03
Protect minimum payments on every debt
Confirm the minimum payment for every debt is scheduled or automated so no account falls behind while you focus extra payments on the smallest one.
- 04
Determine extra monthly payoff capacity
Subtract total monthly expenses and all minimum debt payments from monthly income to find how much extra you can put toward debt.
Extra payoff capacity = monthly income - all fixed expenses - sum of all minimum payments
- 05
Direct all extra payment to the smallest debt
Apply the full extra amount to the smallest-balance debt each month, beyond its minimum, while paying only minimums elsewhere.
- 06
Roll the payment forward when a debt is paid off
Once the smallest debt reaches zero, move its former minimum plus the extra payment amount to the next-smallest debt on the list.
- 07
Set a monthly review cadence
Pick a recurring date each month to confirm payments posted correctly and re-sort if a balance changed enough to reorder the list.
- All debts are sorted smallest to largest balance
- Every debt has an automated or scheduled minimum payment
- A specific extra payment amount is calculated and applied to the smallest debt
- A process exists for rolling payments to the next debt once one is paid off
Monthly
- Confirm the extra payment posted to the correct (smallest-balance) debt
- Re-sort the list after any debt is paid off or a balance shifts
- Recalculate extra payoff capacity after income or expense changes