How to Use the Snowball Method to Pay Off Debt (Australian Guide 2025)

How to Use the Snowball Method to Pay Off Debt (Australian Guide 2025)

If you’re juggling multiple debts and struggling to stay motivated, the Snowball Method could be your best solution in 2025. It’s simple, powerful, and helps you stay focused.

What Is the Snowball Method?

The Snowball Method involves paying off your smallest debt first — regardless of interest rate — while making minimum payments on all others. Once the smallest is paid off, you move to the next smallest, and so on.

Why It Works

  • Psychological Wins: You get small wins early, keeping you motivated.
  • Momentum: Like a snowball rolling downhill, your progress gets bigger and faster over time.

Steps to Follow

  1. List all your debts from smallest to largest (ignore interest rate)
  2. Make minimum payments on all debts
  3. Throw extra money at the smallest debt
  4. Once it’s paid off, roll that amount into the next smallest

Example:

  • Credit Card 1: $600
  • Car Loan: $3,000
  • Credit Card 2: $4,500
  • Personal Loan: $7,000

You start with Credit Card 1. Once paid, use the freed-up money to pay the car loan faster, and continue rolling payments forward.

Tips for Australians in 2025

  • Use budgeting apps like WeMoney or Pocketbook to track progress
  • Automate extra payments right after payday
  • Celebrate milestones (e.g., debt-free dinner night!)

Bottom Line: The Snowball Method works not just because of math — but because of mindset. Small wins lead to big freedom.

Disclaimer: Financial advice here is general in nature. For personalised help, consult a licensed financial advisor.

Australian couple using debt snowball method with chart

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