Using the Snowball Method of Create Big Things

Have you heard of the debt snowball method? It’s an approach first shared by Dave Ramsey to guide people in paying down their debts. Here’s a simplified version of the approach:

  1. You list all debts in ascending order from smallest balance to largest. This is the method’s most distinctive feature, in that the order is determined by amount owed, not the rate of interest charged. However, if two debts are very close in the amount owed, then the debt with the higher interest rate would be moved above in the list.
  2. Commit to pay the minimum payment on every debt.
  3. Determine how much extra can be applied towards the smallest debt.
  4. Pay the minimum payment plus the extra amount towards that smallest debt until it is paid off.
  5. Once a debt is paid in full, add the old minimum payment (plus any extra amount available) from the first debt to the minimum payment on the second smallest debt, and apply the new sum to repaying the second smallest debt.
  6. Repeat until all debts are paid in full.

In theory, by the time the final debts are reached, the extra amount paid toward the larger debts will grow quickly, similar to a snowball rolling downhill gathering more snow (thus the name).

The theory works as much on human psychology; by paying the smaller debts first you see fewer bills as more individual debts are paid off, thus giving ongoing positive feedback on your progress. [Wikipedia]

I’m sure you’re quite baffled as to why I’m writing about debt reduction when I’m all about amplifying yourself. Well, it’s because the same mathematics of debt reduction can also apply to amplification. Instead of going from big (debt) to small, you want to go from small (awareness) to big. Continue reading “Using the Snowball Method of Create Big Things”