How the Debt Snowball Method Can Transform Your Finances (With Just $100/Month)

Natalie Dauzat
33 minutes ago
3 min read

When you’re juggling multiple bills — credit cards, personal loans, car notes, and a mortgage — it’s easy to feel stuck. The payments never seem to end, and progress feels slow. One of the simplest and most motivating ways to regain control is the

Debt Snowball Method.

This strategy focuses on paying off debts from smallest to largest, giving you fast wins that keep you moving forward. At American First Financial Services, we’ve seen how powerful this method can be for customers working toward financial stability.

Let’s walk through a realistic example so you can see exactly how it works.

🔢 Your Starting Debts

Here’s our scenario:

Debt	Balance	Monthly Payment
Credit Card C	$500	$25
Credit Card A	$2,500	$85
Credit Card B	$3,000	$95
Loan XYZ	$5,000	$235
Car Loan	$28,000	$522
Mortgage	$185,000	$1,750

For this snowball example, we’ll exclude the mortgage because it’s usually a long-term, stable payment.

You also have an extra $100 per month to put toward debt.

🎯 Step 1: List Your Debts From Smallest to Largest

The Snowball Method ignores interest rates and focuses on balance size:

Credit Card C — $500
Credit Card A — $2,500
Credit Card B — $3,000
Loan XYZ — $5,000
Car Loan — $28,000

❄️ Step 2: Attack the Smallest Debt First

Amount paid toward Credit Card C:

Regular payment: $25
Extra snowball: $100
Total monthly payment: $125

Credit Card C payoff time:

$500 ÷ $125 = 4 months

While paying this card off, you are still making minimum payments on every other debt. That means those balances are decreasing behind the scenes.

Balances after 4 months:

Credit Card A: $2,160
Credit Card B: $2,620
Loan XYZ: $4,060
Car Loan: $25,912

Small win achieved — time for the next one.

❄️ Step 3: Roll the Snowball to Credit Card A

When Credit Card C is gone, its $125 rolls into the next debt.

Payment toward Card A:

Regular payment: $85
Snowball from Card C: $125
Total: $210/month

Card A payoff time:

$2,160 ÷ $210 ≈ 11 months

Now you’re 15 months into the plan.

Balances after 15 months total:

Credit Card B: $1,575
Loan XYZ: $1,475
Car Loan: $20,170

You’ve now eliminated two debts and built serious momentum.

❄️ Step 4: Roll the Snowball to Credit Card B

The snowball grows again.

Payment toward Card B:

Regular payment: $95
Snowball from Card A: $210
Total: $305/month

Card B payoff time:

$1,575 ÷ $305 ≈ 6 months

You are now at 21 months total.

Balances after 21 months:

Loan XYZ: $65
Car Loan: $17,038

At this point, the personal loan is almost gone already from the regular payments alone.

❄️ Step 5: Roll the Snowball to Loan XYZ

Now the snowball is powerful.

Payment toward XYZ:

Regular: $235
Snowball from Card B: $305
Total: $540/month

Remaining balance: $65

This pays off in 1 month.

Car loan meanwhile:

Remaining Balance: $16,516

You are now at 22 months in.

❄️ Step 6: Roll Everything to the Car Loan

This is where the plan becomes life-changing.

Payment toward the car:

Regular: $522
Snowball: $540
Total: $1,062 per month

Car loan payoff:$16,516 ÷ $1,062 ≈ 16 months

—

🎉 Everything Except the Mortgage Is Gone in 38 Months

Here’s your full timeline using only $100 extra per month:

Debt	Months to Pay Off	Cumulative Time
Credit Card C	4 months	4 months
Credit Card A	11 months	15 months
Credit Card B	6 months	21 months
Loan XYZ	1 month	22 months
Car Loan	16 months	38 months

That’s a little over 3 years to become completely non-mortgage-debt-free.

And when it’s over, you unlock:

💰 $1,062 per month of new cash flow

That’s money you can move toward:

Savings
Emergency fund
Mortgage principal
Retirement
Repairs
A buffer to keep yourself from ever falling behind again

⭐ Why the Debt Snowball Works

The power is in the momentum.

When you eliminate a small debt quickly:

You stay motivated
You see real results
You get encouraged to keep improving
Your monthly cash flow multiplies

It’s a strategy built on positive habits — something we emphasize with our S.A.W. (Stability, Ability, Willingness) model and our overall focus on helping customers rebuild credit and financial stability.