The “Snowball” Method is Dave Ramsey’s system for getting out of debt quickly. It basically boils down to paying off the smallest loan you have first. So, if you have $2,000 in credit card debt, a $10,000 student loan, a $15,000 car loan, and a $150,000 mortgage, then you aggressively go after the credit card debt first, then move up. Most people think that you should pay off the debt with the highest interest rate first, but by eliminating an entire payment first, you are saving more money. For more info, check out the entire article by Dave Ramsey here, and this post by Stacy at Stacy-Work In Progress, for how she actually used the method:
It not only gives you a feeling of success when you knock out that first debt, it also gives you a small, manageable goal that doesn’t seem impossible to reach. Every time we crossed a creditor off our list, we had reached a goal. I’ve had to stop focusing on the big picture and get down to the details. Those details are what are going to get us to our final goal!