The Debt Snowball Method: A Life-Changing Strategy to Manage Your Debts

Finding yourself with several debts to manage can create anxieties and worries. Try the snowball savings method, a strategy that will change your life.

Enter the debt whirlwind it can prove devastating both financially and mentally. When you find yourself having to manage debt situations, perhaps after losing your job, the risk is that the situation will progressively worsen and that others will be added to the first debt. A real nightmare that can create quite a few anxieties and worries, more so if you don’t know how to handle it. In this regard, there is a method that is depopulating in the United States but which is increasingly being spoken of in Europe, including Italy.

We are talking about a strategy known as “The debt snowball method” or the “snowball saving method“. Do you know him? Have you ever heard about it? Below we will explain how it works and how it will help you save money by effectively canceling any of your debts.

How to pay off debts with the snowball method: the trick to try

The creator of this strategy is not just any person: it’s called Dave Ramsey and he is a well-known US financial guru who has worked for a long time to shape methods that help people reduce their debts and who for this reason has gained a certain notoriety on a global scale. The savings method snowball is, in this case, one of its best-known strategies precisely because it allows you to progressively eliminate debts quickly while increasing savings.

It all starts with a question, that is, how do you create one big snowball? You clearly need to shape a first amount of snow with your hands and then collect more by rolling the ball so that it increases in size. The method at Ramsey function in the same way, that is, first starting to deal with a small debt, gradually moving on to more burdensome ones.

First, therefore, it is necessary to prepare a list of each debt, from least expensive to most expensive. Every month it will therefore be necessary to start paying off the small expenses of each debt with the exception of the smallest one, to be kept as the final goal. It is a procedure divided into four distinct phases: the list of debts, the settlement of a minimum payment of each debt on a monthly basis and with the exception of the debt of lower valuethe repayment of the smallest debt and finally the repetition of the third point but moving on to the following debt, slightly higher (but in the meantime reduced in value thanks to the monthly payments).

Lto strategy it works because it’s motivating, whereas having to manage a large debt from the beginning and trying to pay off only that is not. In fact, you would risk stopping paying and ending up in a difficult situation psychological stress very difficult to manage. Ramsey’s method in fact acts on the behavior of the person who has to pay off debts, thus reducing the sources of anxiety.