A debt reduction strategy where you pay off debts from the smallest balance to largest, gaining momentum as each balance is paid off.
Very few people will have the discipline to stay focused that long, especially if you’ve been living in a pattern of poor money management. (Old habits die hard.)
The reason I recommend creating your initial list of debts in an excel spreadsheet or Google Sheet is so that you can add all of your debts in no particular order.
Before you start tackling debt, remember that you have to maintain all of your existing minimum payments. We can’t rob Peter to pay Paul here.
You’ll need to find any extra money to throw at your debt snowball. Now is the time to get creative and be scrappy.
Dave calls it getting “gazelle intense”. Put all of the extra cash towards your smallest debts first and knock them out as quickly as possible.
You need to save $1,000 in an emergency fund before paying off any debt. This is actually baby step #1 in Dave’s 7-step plan.