Debt Snowballing: A Motivating Method to Boost Your Credit Score for Better Mortgage Rates.

By Joe Apostol

Let’s get right into it, debt snowball repayment strategy can reshape your credit by helping you build momentum and strengthen confidence in adopting new habits.

Sounds like a game changer to me!

It's actually quite simple to set up.  Made popular by financial expert Dave Ramsey, this method focuses on tackling your smaller debts first, giving you quick wins that fuel your progress.

The process begins by:

• Listing Your Debts: Arrange them (excluding your mortgage) from your smallest to largest balances.  Include student loans, car loans, and personal loans along with credit cards.

• Focus on the Smallest Debt: Make minimum payments on everything except the smallest debt, where you’ll add any extra cash discovered by a separate monthly budget plan already created.

• Snowball Payments: Once a debt is paid off, roll that payment into the next smallest debt listed.

• Repeat: Keep going until all your debts are eliminated!

Consider a person with three debts: a $500 credit card balance, a $1,500 personal loan, and a $5,000 car loan. 

The primary focus is on paying off the smallest balance. First, make a monthly budget to determine how much extra money you can put towards your debt. Start with your $500 credit card balance adding extra money you can spare. Then pay the minimum on your other two. Once your credit card is paid off, then you can redirect those funds towards your personal loan. Continue this strategy with your car loan till everything is paid off.

Believe me I’ve been there, in my mid-thirties still paying student loans and two credit cards I got during college just to get a frisbee or some other free swag with my credit score that could scare off any potential landlord.  After a lot of budget crunching and self sacrifice, I made the commitment and acted on the debt snowball method.  Four years later, my credit score qualified me for an apartment—even a mortgage–and even completely debt-free!

Critics argue that the debt snowball method may result in higher overall interest costs as it neglects high-interest debts first. Others believe the motivational boost from early wins helps many people stick to their repayment plans—either way, this leads to debt freedom.

While it may not always be the most cost-efficient method, creating new habits make it a preferred strategy for those seeking motivation and discipline in their debt repayment journey.The debt snowball method could be the structure you need to eliminate debt by focusing on quick wins and building momentum, let me know how it goes…