4 Common Mistakes That Can Sabotage the Debt Snowball Method

Dave Ramsey talks a lot about the debt snowball method, which he considers to be the most effective method of paying off debt. Although effective, there are some common pitfalls that people who attempt to do so end up falling into. Here are some thoughts from Stefanie Gordon, a finance enthusiast on what those issues are and how you can avoid them, to help you get out of debt faster.

Debt can feel overwhelming, but certain payoff strategies, like the debt snowball method, can help you gain control of your finances. However, these tactics are payoff blueprints to follow—not bulletproof techniques.

If you don’t have the self-discipline to control your spending or if you forget to pay the rest of your bills, the debt snowball strategy won’t work for you. And before long, you may be searching for tips on debt settlement or how to consolidate debt with bad credit.

To avoid payoff plan failure, here are 4 common mistakes you should try to avoid. But first, what exactly is the debt snowball method?

Debt snowball definition

The debt snowball method focuses on paying down your smallest balances first. You’ll continue to make minimum payments on all your balances to avoid late fees and drops in your credit score. But you’ll put extra money toward your smallest balance. Once that balance is paid off, you’ll put the extra cash toward the second-smallest balance.

The idea is that by eliminating your small bills, you’ll slowly build up payoff momentum, similar to a snowball careening down a mountain.

Common debt snowball mistakes

1. Trying to pay more than one debt at a time

It may be tempting to try to pay off more than one debt at a time. After all, won’t that help you pay off your debt faster? Not really, as trying to pay off multiple debts can feel overwhelming and will also slow the payoff process. Meaning you could either a) lose confidence and give up trying to pay your debts altogether, or b) you won’t see results as fast as you would if you just stuck with the snowball method.

2. Not rolling over payments to the next debt

Let’s say you just finished paying off your smallest debt. Hooray! You decide to take advantage of the fact that you have some extra money on hand and instead of putting that extra cash toward the next debt, you decide to add it to you discretionary spending fund.

Not so fast. You might think you’re giving yourself carte blanche and extra cash to toast to the good life, but what you’re actually doing is lengthening the amount of time you’ll be in debt. You need to use the cash saved from the debt you’ve knocked out to help pay off your next debt. In other words, save the YOLO spending for when you’re finally debt-free.

3. You keep paying with credit

It’s best to stop using your credit cards when following the snowball method. Otherwise, you could continue to accrue new debt even as you try to pay off your existing debt. By giving your credit cards a rest, you’ll be able to focus 100% on eliminating your existing balances.

4. You forget about your other bills

While it’s great to focus on the snowball method to pay off your balances, it’s important that you don’t forget about the rest of your payments owed: e.g. rent, utilities, etc. This could put you deeper in debt, the exact opposite of what you’re trying to achieve. Focus on following the snowball method but be sure to stay on top of your other expenses.

Committing to the debt snowball method can help you drop kick your debt into oblivion. But it won’t work if you make some of these common slip-ups. Stick to the plan, give those credit cards a breather, and make sure to pay off your bills on time. You’ll be enjoying a better financial future before you know it.