Overview of the Debt Snowball Method

The debt snowball method prioritises paying off debts from smallest to largest balance while maintaining minimum payments on all other debts. Once a smaller debt is paid off, the amount used for its payments is rolled into the next smallest debt, creating a “snowball” effect.

For an in depth analysis of the snowball method – see our special report Debt Snowball Method: A Simple Way to Clear Debt?

Whilst the total saved is often somewhat less than using the avalanche method, it has the great psychological advantage of giving you “wins” early on and so may well prove easier to stick to and get to your debt goals more reliably.

Use this spreadsheet example and template to see how it works!

How to Use the Snowball Payoff Template

First create a couple of spreadsheets from the template. For each right click on the tab at the bottom and select duplicate:

Name your sheet – this first one will be the one without using Snowball.

Now enter the details of each debt to the spreadsheet. Order them by the lowest outstanding debt to the highest eg:

Next fill in the date column by first replacing the date in the top cell with your start time eg 01/01/26

Then fill in the rest of the column by clicking on the handle (small dot on right bottom of the cell), then pulling down on the data fill handle – by moving your mouse down while keeping the left button down, until you reach row 100:

Later you may need to extend the date rows – just drag it down again like you just did.

Now for each debt select the 3 cells in row 4 – click cell B4 and then hold shift and click cell D4

and pull down by moving the mouse with the left button down, until the debt goes red (ie it is paid off) – if you overshoot, don’t worry, the formula for the totals ignores negatives:

Do the same for the other loans. Then you will see the totals for each loan and the grand total on the right:

Seeing what you would pay using the Avalanche Method

Create a duplicate sheet like we did earlier.

Setup your date column as before. Now fill in the initial data as before (this time be sure to order them by interest rate).

However this time we will be loading as more payment on loan one , so it will receive £100 a month, whilst the others get correspondingly less at the start:

Select the 3 cells for loan 1 as before and pull down until the debt is paid off:

Now select the 3 cells for loan 2 and pull down until the data is filled in upto the loan 1 payoff date:

The money that was going to loan 1 (our high interest credit card) can now go toward loan 2 -the personal loan. So change the value in the payment cell (F19 in the example) from £60 to £160. Then drag the data down again until loan 2 is fully paid.

Repeat the process for each of your loans, each time one is paid off, snowball it’s payment to the next.

The result is that using the snowball method you could save £5,170!

If you want to compare with using the avalanche method, please read our article How to Use the Avalanche Method to Pay Off Debt Fast