A man took to Reddit to share how he used the “debt snowball” method to pay off Rs 12.2 lakh in two years. He further advised Redditors to “start small” and “pay off their first Rs 5,000”. 

In his post on Reddit’s “personal finance India” community, he listed multiple outstanding credit or loan balances from various lenders and BNPL platforms and how he was able to pay them off. These range from small amounts like Rs 7,500 to large personal loans of Rs 3.8 lakh and Rs 2.59 lakh, totalling to Rs 12.22 lakh. 

“Rs 12.2 lakh down in 2 years. How I’m using the debt snowball method to clean up my debt?” the Redditor wrote. 

In his post with the tag “debt”, he shared, “I paid off Rs 12.2 lakh of debt in 2 years. Here’s how I did it. Breakup: Rs 2.74 lakh – Slice, Rs 40,000 – Sampati, Rs 75,000 – Mobikwik, Rs 25,000 – Ring, Rs 50,000 – PayTM Postpaid, Rs 22,000 – mPokket, Rs 7,500 – ICICI PayLater, Rs 2.59 lakh – CRED, Rs 3.28 lakh – Bajaj, Rs 9,500 – Ola Postpaid, Rs 1.3 lakh – ICICI Personal loan. Total: Rs 12.22 lakh.”

“I followed the debt snowball method. Start small, pay off your first Rs 5,000,” he further wrote. 

A debt snowball is a repayment method where you pay off the debts starting with the smallest balance first, while paying EMIs for other loans. When this first loan amount, which is the smallest of them all, is fully repaid, then you move on to the next one and add the EMI amount you were paying for your previous loan to the current EMI amount to accelerate repayment.

Say, for example, the smallest loan you owe is Rs 500. You also have a debt of Rs 1,000 and Rs 2,000. As per the method, you would focus on paying off the Rs 500 debt first while making minimum payments on the other two. After the Rs 500 debt is paid, you combine that amount with the minimum payments on the Rs 1,000 debt, accelerating that payoff, and so on for the Rs 2,000 one. 

The Redditor also followed a similar approach. “I listed all debts from smallest to largest. Paid minimums on everything, and threw every extra rupee at the smallest,” he revealed. 

The Redditor further said, “Each time I cleared one, I snowballed that EMI into the next. I stopped using credit cards and BNPL completely. I tracked everything in a simple Google Sheet to stay motivated.”

Well, to save the smallest amount, you’re paying interest and channelling that money to pay off your next loan. The method is called the snowball method, as just like a snowball rolling downhill, you pay off smaller debts and free up payments. 

Not only does this method help you pay off debts faster over time, but it also provides you with a sense of satisfaction over small wins. 

When someone on Reddit asked him if he ever missed out on payments, he said, “Yes, I have. I was laid off in 2023, so for a couple of months, I was delayed on my education loan and car loans. So when I started a new job, I couldn’t repay the overdue amount immediately. So, in my CIBIL, it shows almost a year of late payments, varying from 0-30, 30-60 days delinquent. This is what triggered me to start paying off the small ones immediately and start the debt snowball.”

One person responded to the post, saying that they are trying to snowball their current debt and asked, “Did your CIBIL score change once you started paying the EMIs? Also, how did you manage to pay the minimum due? They were not fixed EMIs? Did you not get calls from their customer service for missing the EMI? How did you manage your daily/monthly expenses while trying to pay them off?”

In response to this, the OP said, “Once you start repaying on time, the score improves. It jumped 40 points when I cleared all overdues and brought it to normal. Only credit cards & BNPL had the concept of minimum dues; the rest were EMIs. I was only delayed on education & car loan, both from a nationalised bank. Yes, they sent several emails, and the bank manager, AGM, and  DGM of the region were also regularly calling. But I told him that my loan is collateralised against 2x value in property, so I have more to lose than you guys. I cut down on everything, except the basic needs. Rent, groceries, electricity and other utilities were okay, but nothing else. Over these last two years, I filled full tank in my car only 3-4 times; otherwise, I’d just fill up 500 and try to drive more efficiently.”