Img src:

Someone writes in and asks which debt that should pay off first and I answer her question in a way that may shock you.

Highlights from this episode

  • How the Debt Snowball method helped us pay off $52,000 in debt in 18 months
  • I respond to a lady who writes in and will soon have to pay off a mortgage ($35,000 @ 5.125%) or an equity line ($23,000 @ 3.5%)
  • Difference between the Debt Avalanche and the Debt Snowball

Helpful links

Debt Elimination Form

Get Out of Debt Fast

Debt Success Stories


Hello everyone. Today, we’re going to talk about the debt snowball which is where you pay off your debts smallest to largest regardless of the interest rate. This was inspired by an email that I got from a lady who was looking to payoff 2 different loans. I will go into that a little bit further in the show but first off, what I want to do is tell you more about our story and how the debt snowball was so impactful for us.

There are two different methods, right? The first method is the debt avalanche and that’s where you pay off your debts by the highest interest rate first. If people are disciplined and they’re mathematically driven which is not the majority of people, that can be an effective method. For most people and for us, the most effective method was the debt snowball method where we listed our debts smallest to largest regardless of the interest rate and we tackle the first debt with every extra penny of cash that we had until it’s paid off. Then we took, what we were paying on that first debt, we took that payment and we rolled it into the next debt. By doing that, it gave us a momentum, right? Kind of that snowball building up slowly overtime.

The beauty was, we got these victories really fast that helped us build the momentum and confidence that we needed to pay off our debt, our $52,000 in consumer debt in just 18 months. If you’re in that situation and you’re saying, “Hey! I really want to get out of debt. I don’t want to wait forever. I want to do what works.” I really highly recommend the debt snowball. As a side note, like I said, what inspired this podcast episode was a lady who emailed me who had a very unique situation. This isn’t a situation for everybody but she had 2 different debts. She had a home equity line and she had a mortgage. She was going to be getting a large sum of money and she needed to figure out which one is she going to pay off first. The first debt was a $35,000 mortgage at 5.125%. So $35,000 on the mortgage and the home equity line of $23,000 and that was at 3.5%. Her question simply was, which one would you pick and why?

Normally, I would say the debt snowball, right? Like I said, I’m passion about it. It helped us pay our 52 grand in debt in a short period of time but here’s an exception. She’s getting a windfall. She’s getting some sort of money that’s going to be able to allow her to pay off one debt or the other in a lump sum. In that case, it’s a no brainer. It’s pay off the highest interest rate because you have the money in full and it’s not like psychologically, you’re going to have a win early on, right? That’s the whole point of the debt snowball. Then, she get us develop a plan to pay off the $23,000 of her home equity line.

That is a very unique case but as I’ve mentioned previously in the episode about the new direction for the Well Kept Wallet podcast. I’m really encouraging you to send in your questions. I’m going to answer those on the podcast. I’m going to give you kind of my personal experience, my financial expertise in how I would approach it. For that specific situation, that’s exactly what I would do. I would pay off the mortgage because it had almost 2% higher interest rate, she’s getting a lump sum so she’d be able to pay it off in a short period of time. For that particular situation, that’s what I would do. But like I said, for 90% of you listening and for those of you that are in debt and you’re looking to get out of debt, the debt snowball is going to be the way to go and that’s what we used when we paid off our consumer debt and so really that would be the method that I would use.

I will give you some more information in the show notes about the debt snowball, link to a couple of posts that might be relevant if that’s you, if you’re in that situation. If you are interested in being highlighted on the show, send me your question, let me know if you want to remain anonymous or if you want me to give you a shout-out, we’ll be glad to. I also would love to get your reviews. In iTunes, you can leave a review and if you have your iTunes open, it literally will take you less than a couple of minutes just to leave a review. I would love a 5-star review. If you don’t give one, that’s okay. I want your honest feedback so please leave an honest review and if there’s something that you’d like to see on the show, email me at

It’s been fun. This is a short episode. But like I said, I want to just interject some of these nuggets of wisdom for me personally. Next week, we’re going to have a great interview with a guy who’s killing it online and e-commerce business selling dance wear of all things but he’s loving it. Look forward to that next week. A couple of quick final thoughts. If you want the debt elimination form that we use that tells you how long it will take to pay off your debt, you can get that at the and if you’re on, you just click on the resources tab at the top. Lastly, if you do leave a review, I just want to remind you, you’ll get a 15-minute money session with me. You can ask me any question that you might have about personal finance, entrepreneurship, career, money and lifestyle. We’d love to get that review and thank you again for listening and look forward to getting back with you next week.


Refinance Your Student Loans or Credit Cards

With the average credit card interest rate around 15%, this could save you a ton of money over the long haul. Check out Credible who will help you refinance your credit card debt to as low as 4.99%. Use this link to get a $50 bonus if you get approved.

Want to refinance your student loans? Credible can help you get as low as 2.78% APR. Use this link to get $150 cash back if you get approved for refinancing your student loan. The average graduate who refinances through Credible saves $18,668!

Join Our Newsletter

Get more content like this delivered to your email.

Wait! Get my free Debt Snowball form


Don't go yet! Subscribe to our newsletter and get my FREE debt snowball form.

We won't send you spam. Unsubscribe at any time. Powered by ConvertKit