Q:

# How does the Dave Ramsey debt snowball work?

A:

The Dave Ramsey debt snowball is a method for a person or family to begin paying off debts owed, from smallest to largest, regardless of interest rate, says Dave Ramsey. By paying off the smallest debt first, one gains momentum toward paying off the next smallest debt, and so on, until all debts are repaid. The debt snowball is step two in Dave Ramsey's 7 Baby Steps system for getting out of debt and building wealth.

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The idea behind the debt snowball is that often debt is less of a math problem and more of a behavior issue, according to Dave Ramsey. With the debt snowball, one makes minimum payments on other debts, while putting the majority of effort toward paying the small debt off first. People tend to gain confidence in the process and in their own ability to become debt-free.

Paying off loans with the highest interest rate first may make mathematical sense, but paying off loans smallest to largest often makes more financial sense to the consumer, claims the Kellogg School of Management.

Ramsey is the author of several New York Times bestselling books. With his 7 Baby Steps program, along with the popular Financial Peace University classes and The Dave Ramsey Show, Ramsey has helped millions of people repay their debts and save money, according to SEA Financial Group.

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