The debt snowball is one of the simplest debt repayment plans I’ve seen, and it works because it’s easy to follow. If you’re staring at post-holiday credit card balances or trying to get in a better spot before a mortgage, the debt snowball can help you build momentum quickly.
Read on to learn more about the debt snowball or check out my video!
What Is the Debt Snowball Repayment Plan?
The debt snowball is a repayment plan where you list your debts from smallest balance to largest balance. You focus on paying off the smallest debt first, then roll that payment into the next debt, and keep going.
It’s called a “snowball” because the payment grows as each debt gets wiped out.
How To Set Up A Debt Snowball Repayment Plan
Start with a simple list:
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Write down every debt you have (credit cards, lines of credit, car loans, etc.)
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Sort them from smallest balance to largest balance
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Keep making minimum payments on everything
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Put any extra money toward the smallest debt until it’s gone
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Move to the next debt and add the old payment amount to the new one
You’re not trying to do ten things at once, instead, you’re trying to finish off the smallest payment, then your second payment, then your third.
How Can You Make Extra Money to Pay Off Debt?
This is the part that many people skip, but it really matters. The debt snowball works best when you create extra cash flow.
A few practical ideas:
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Sell things you don’t need (even gifts you’ve received that you won’t use) on Kijiji or Facebook Marketplace and put the money towards your smallest balance of debt
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Cut one or two expenses or subscription programs for 60–90 days and redirect the savings
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Pick up temporary extra income if that’s realistic for you
The goal with saving is consistency.
Why The Debt Snowball Helps Homebuyers
If you’re looking to buy your first home, the debt snowball can help you shift from “barely qualifying” to “buying confidently.”
Less debt can help in two ways:
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Lower monthly payments can improve your budget and reduce financial stress
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A cleaner debt picture can make mortgage qualification easier, depending on your situation
Once the smaller debts are gone, many people find it easier to build savings without feeling like they’re drowning.
If you already own a home, the debt snowball can help you clean up consumer debt and protect your monthly cash flow. Paying down debt also helps you build options. Options are what you want whenever your life changes abruptly.
The Simple Next Step
If you want help mapping out your debt repayment plan and how it affects your mortgage plan, I’m happy to talk it through.
Whether you are preparing to buy your first home or your fifth, if you’re looking to get pre-approved for a mortgage in Edmonton, fill out my online application. I’m here to help you every step of the way.
About Jason Scott, Edmonton Mortgage Broker
Looking for a personalized mortgage solution? As an Edmonton Mortgage Associate, I’m trusted partner who will help you get the right mortgage for your home or investment property. I’m Jason Scott, and I’ll be your Mortgage Broker in Edmonton.
