Pay off debt with the roll-over method

Pay off debt with the roll-over method


If you have had to pay for a car, a home, college tuition, or used a credit card, you are likely familiar with debt, including the potential challenges that arise when you are maintaining debt across multiple credit lines. When it comes to paying off your debt, you may have trouble deciding which one to pay off first. Should you pay the largest amount first, the smallest amount, or the amount with the highest interest rate? There are multiple approaches, and finding the right one depends on personal preference and capabilities. One popular method to consider is roll-over debt reduction, which is also referred to as the debt snowball method. 

Roll-over debt reduction helps people create an order of repayment and builds sustainable momentum in their debt repayment. This method can be used by anyone and is a simple concept to implement. The beauty of this system is that your payments get bigger as you pay off more debt and free up more cash. This gradual increase in size is similar to a snowball getting bigger as it goes downhill, hence the nickname. 


To start, list all of your debts from smallest to largest. Don't include the interest rates here. This list only considers the actual amount, also referred to as the balance owed or principal owed.

Next, make the minimum payment on all of your debts, except for the smallest debt. On the smallest debt, pay as much as you possibly can. This often entails cutting your monthly costs to create some excess in your budget. Each month, apply that same amount toward the smallest debt until it is paid off. Then, move on to the next smallest debt by paying the minimum monthly payment plus the amount you had been applying toward the first debt. Once you pay off that debt, move on to the next, rolling forward larger and larger payments until you are debt free.  Use this helpful calculator to get started on your roll-over plan:

Debt Calculator

It is imperative that during this process you do not accrue more debt due to new purchases. Your amounts may change due to interest fees.

For many, the roll-over method is a clear path toward becoming debt free and being able to start saving money.