What Is the debt snowball method?

The debt snowball method is a simple yet powerful debt repayment strategy. Rather than focusing on interest rates, it focuses on momentum.

Here’s how it works:

• List all debts from smallest to largest (ignore interest rates).
• Make minimum payments on all debts—except the smallest.
• Direct all extra funds toward paying off the smallest debt as quickly as possible.
• Once the smallest is cleared, roll that payment into the next smallest debt.
• Repeat until every debt is gone.

This approach creates a snowball effect – your repayment power grows as each debt is eliminated, giving your clients visible progress and motivation to continue.

Why accountants should recommend it

While the debt avalanche method (paying off highest-interest debts first) is technically more efficient, the debt snowball method is often more effective in real life.

Here’s why it works so well – especially for clients who feel overwhelmed:

• Psychological wins create momentum
  Clients gain motivation with every cleared debt. These early victories boost confidence and keep them committed.
• Simple and structured
  There’s no complex math or financial acrobatics—just a clear, step-by-step plan anyone can follow.
• Promotes financial discipline
  It encourages clients to live below their means, budget effectively, and avoid taking on new debt.
• Improves financial wellbeing
  With fewer debt payments, your clients reduce financial stress and gain peace of mind.
• Boosts credit scores
  As debts are paid off, credit utilization improves – often leading to a better credit profile.

Why this matters for your practice

Helping clients reduce personal debt directly impacts their business and tax planning success.

Here’s how:

• More cash flow for investing, tax planning, or business expansion.
• Reduced financial risk—especially important for self-employed or small business clients.
• Greater openness to strategic advice once foundational stress is reduced.
• Deeper trust in you as their adviser—not just a compliance provider.

Want to help clients take action?

Here’s a quick process you can guide them through:

• Review their current debt obligations (personal, business, credit cards, etc.).
• Create a debt snowball list, sorted from smallest to largest.
• Map out a realistic repayment schedule, based on their budget.’
• Identify surplus cash flow – bonuses, tax refunds, or unnecessary expenses—to accelerate the process.
• Track progress and celebrate milestones with them.
• You can even integrate this approach into broader cash flow advisory or financial wellbeing packages.