How to Create a Debt Snowball Method Spreadsheet for Free
- With the debt snowball method, you pay off debts in order of smallest balance to largest.
- Seeing debts disappear one by one may help keep you motivated to stay on track.
- Creating a debt snowball method spreadsheet could be easier than you expect.
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Juggling multiple debts is a balancing act, whether they’re medical bills, credit card payments, or personal loans. You want to pay off all your debts, but you're just not sure the best way to balance your payments.
One strategy you've heard works well is the debt snowball method. But is it the right fit for you? Let's review this strategy, and look at creating a debt snowball method spreadsheet to help you get rid of debt.
What Is the Debt Snowball Method?
The debt snowball method is a debt payoff strategy that involves paying off your debts one at a time, in order from smallest balance to largest balance. Start by listing all of your debts so you know where to focus first.
Make your minimum payments on all your debt. Then, send any extra money to your smallest debt until it's paid off.
Once the first debt is gone, you add that payment amount to the minimum payment amount for the next-smallest debt, and apply any extra money you have toward that balance. You repeat this process until all of your debts are gone.
Debt snowball method example
Here's a simple example of how the debt snowball method might work.
Let's say you have the following debts:
A $2,000 personal loan balance
A $2,200 medical bill
A $3,400 credit card balance
With the debt snowball method, the first debt to tackle is your personal loan, even if it doesn't have the highest interest rate. When extra money comes your way, you put it into your personal loan only. Once that personal loan is paid off, you put its minimum payment amount plus any extra money toward the medical debt (in addition to the minimum payment you’re already making on the medical debt) and so forth.
What Are the Benefits of the Debt Snowball Method?
The debt snowball method isn't the only strategy you can use to get out of debt, but it's effective for a few reasons.
You could get some quick wins
If you have a few smaller debts to pay off, you may find that you're able to shed them pretty quickly with the snowball method. Any time you get rid of a debt entirely, it creates a sense of accomplishment. That, in turn, could help you stay motivated to tackle larger debts.
It's incredibly simple
The debt snowball method isn't hard to understand. All you need to do to get started is see how much money you owe on each debt.
It's easy to stay focused
With the snowball method, your aim is to pay debts down in full, one by one. Instead of making extra payments on multiple debts, you focus on just one at a time. You always know where the money needs to go.
How to Create a Debt Snowball Method Spreadsheet for Free
For the debt snowball method to work, you need to have a full picture of your debts. And creating a debt snowball method spreadsheet is essential. Here's how.
Step one: Find a tool that works for you
There are plenty of free tools you can use to list and track your debts, including Excel, Google Sheets, and undebt.it. You could even go old-school and use paper and a pen.
Step two: Set up your debt snowball method spreadsheet
Your debt snowball method spreadsheet should include the following columns:
Name of debt
Total balance
Minimum payment
Extra payment
Remaining balance
Here's what your spreadsheet columns might look like when you first set it up:
| Name of Debt | Total Balance | Minimum Payment | Extra Payment | Remaining Balance |
|---|---|---|---|---|
Step three: Fill in your debt snowball method spreadsheet
Once you have your categories listed, order your debts on your spreadsheet from smallest balance to largest. Here's what it might look like then:
| Name of Debt | Total Balance | Minimum Payment | Extra Payment | Remaining Balance |
|---|---|---|---|---|
| Personal loan | $2,000 | $100 | $2,000 | |
| Hospital bill | $2,200 | $110 | $2,200 | |
| Credit card | $3,400 | $130 | $3,400 |
Step four: Set up a formula
The purpose of a debt snowball method spreadsheet is to seamlessly track your progress. It may help as well to set up a formula so you don't have to do math repeatedly. In the remaining balance column, you can create a formula that subtracts your minimum and extra payments from your total balance.
As you make payments, whether they're minimum payments or extra payments, update your spreadsheet. You should see the remaining balances gradually drop for all your debts, especially the one you're putting extra money into.
Here's what your spreadsheet might look like after a month, assuming you've made all minimum payments, and put an extra $200 toward your personal loan:
| Name of Debt | Total Balance | Minimum Payment | Extra Payment | Remaining Balance |
|---|---|---|---|---|
| Personal loan | $2,000 | $100 | $200 | $1,700 |
| Hospital bill | $2,200 | $110 | $0 | $2,090 |
| Credit card | $3,400 | $130 | $0 | $3,270 |
Step five: Delete debts once they're paid off
Once your remaining balance on any given debt gets down to $0, there's no need to keep it on your spreadsheet as a reminder. Celebrate your win, but then delete it so you can focus on your next-largest debt.
How to Use the Debt Snowball Method Successfully
For the debt snowball method to work, it's helpful to have extra money to put toward your debts each month. To that end:
Follow a budget so you understand where your money is going.
Reduce your spending where possible to free up money for extra debt payments.
Work a side hustle or take on extra shifts to boost your income.
Alternatives to the Debt Snowball Method
While the debt snowball works for many people, it’s not your only option for getting rid of debt when you're juggling multiple balances. Here are some other potential strategies.
The debt avalanche
This is similar to the snowball, except you prioritize your focus debts by interest rate instead of balance size. With the debt avalanche method, you pay off your debts in order of highest interest rate to lowest.
This method may save you more money on interest than the snowball method. However, with the avalanche method, it could take you longer to pay off your highest-interest debt if it isn’t also your smallest debt. If you prefer having that boost of motivation early, the snowball could be the better fit.
Debt consolidation
With debt consolidation, you combine multiple debts into a single loan with one monthly payment. Debt consolidation could make your debt easier to manage, and it may save you money on interest, depending on the rate you get on your consolidation loan.
Debt settlement
If you're juggling an overwhelming amount of debt, are struggling to make your minimum payments, and don't see a way out, you may want to look at debt settlement. Debt settlement means settling your unsecured debts for a smaller amount than what you owe. You can try to negotiate with your creditors yourself, or seek help from a debt relief company.
The Bottom Line
Balancing multiple debts can be challenging, and the debt snowball method could be a good strategy for getting rid of them. Having the right debt snowball method spreadsheet could be your ticket to great progress.
Author Information
Written by
Maurie Backman
Maurie Backman is a personal finance writer with over 10 years of experience. Her coverage areas include retirement, investing, real estate, and credit and debt management.
Reviewed by
Kimberly Rotter
Kimberly Rotter is a financial counselor and consumer credit expert who helps people with average or low incomes discover how to create wealth and opportunities. She’s a veteran writer and editor who has spent more than 30 years creating thousands of hours of educational content in every possible format.
How is the debt avalanche method more cost-effective than the snowball method?
The avalanche method is more cost-effective than the snowball method because it gets rid of your most expensive debt first.
The snowball method prioritizes motivation, while the avalanche prioritizes savings.
Getting out of debt isn’t easy or quick. It takes commitment and a stick-to-it attitude. That’s why the snowball method may be more popular. It’s often the fastest way to get to your first debt payoff, which is a big cause for celebration.
If you play around with an online debt snowball vs. debt avalanche calculator, you’ll see that following the avalanche method could cut about a month off your debt payoff timeline. That may be more significant than it sounds. This one-month payment could be a big one, because at this point, you’re paying off your last debt with a payment that includes all the payments you were making against all of your debts.
But no debt payoff plan is effective if you can’t stick with it.
Only you can decide which DIY method is a better fit for you.
What are the three biggest strategies for paying down debt?
The three biggest strategies for paying down debt are:
Debt snowball: Pay off your debt in the order of their outstanding balances, starting from the smallest.
Debt avalanche: Pay off your debt in the order of their cost, starting with the highest interest rate.
Debt consolidation loan: Get a new loan to pay off multiple smaller debts.
Should I do a debt snowball or debt consolidation?
A debt snowball means paying off your debts one at a time, starting with the smallest loan. As each debt is paid off, you might feel more motivated to pay off the next. If you can afford to make your minimum payments and pay extra toward one debt each month, a debt snowball might be right for you. If you’re having trouble making your payments each month, then another strategy might be more appropriate.