Snowball

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Definition of 'Snowball'

A method of efficient debt repayment in which the debtholder initially devotes only enough funds to cover the minimum payments on each debt, after which any remaining available funds from the debt repayment budget are spent on an additional payment to the debt bearing the highest interest rate. Once the debt with the highest interest rate is completely paid for, subsequent extra debt payments go toward the next highest interest-bearing debt. This process continues until all the debts are paid off.
Investopedia Says

Investopedia explains 'Snowball'

For example, let's say an individual decides to spend $500 every month on retiring his three sources of debt: $1,000 worth of credit card debt (annual rate of 20% interest), $1,250 of car payments (annual rate of 6% interest) and a $5,000 line of credit (annual rate of 8%). Each has a minimum payment of $50.

If the person decides to use the snowball method of debt repayment, he will spend a total of $150 on paying each debt's minimum payment ($50 x 3). The remaining $350 will be spent on a payment toward the highest interest-bearing debt - in this case, the credit card debt. Once the credit card debt has been completely paid for, the extra payment will go toward retiring the second-highest interest bearing debt (the line of credit), and the loan with the lowest rate of interest (the car loan).

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Search results for

'Snowball'

  • TARP Returns Start To Snowball

    http://stocks.investopedia.com/stock-analysis/2009/TARP-Returns-Start-To-Snowball-SBNY-SNBC-ONB-BMRC0406.aspx
    ... Article; Comments (0). TARP Returns Start To Snowball.
    Posted: Apr 06, 2009 15:06 PM by Eric Fox. ...

  • Corporate Defaults Begin To Snowball

    http://stocks.investopedia.com/stock-analysis/2009/Corporate-Defaults-Begin-To-Snowball-MCO-MHP0224.aspx
    ... Article; Comments (0). Corporate Defaults Begin To Snowball.
    Posted: Feb 24, 2009 14:44 PM by Eric Fox. ...

  • How To Reduce Holiday Debt

    http://www.investopedia.com/articles/pf/07/snowball.asp
    ... debts slowly and systematically. The best way is to use the seasonally
    appropriate snowball method. This common-sense technique ...

  • Five Minute Investing: The Reverse Scale Strategy | Investopedia

    http://www.investopedia.com/university/fiveminute/fiveminute8.asp
    ... Like a snowball rolling downhill, the tendency for a declining stock to keep on
    declining, in combination with the scale trader's foolish trading rules ...

  • 5 Financial Math Skills Every Teen Should Learn - Investopedia.com

    http://financialedge.investopedia.com/financial-edge/1011/5-Financial-Math-Skills-Every-Teen-Should-Know.aspx
    ... Most important, we should teach kids how compounding is like a snowball
    rolling downhill. Starting a savings or investment account ...

  • The Pitfalls Of Borrowing From Your 401(k) - Investopedia.com

    http://financialedge.investopedia.com/financial-edge/1211/The-Pitfalls-Of-Borrowing-From-Your-401k.aspx
    ... envelope. The idea is to hold onto the money inside your 401(k) and let it
    snowball, month after month, until doing so becomes habit. ...

  • The Dangers Of Deflation - Investopedia.com

    http://financialedge.investopedia.com/financial-edge/0311/The-Dangers-Of-Deflation.aspx
    ... far greater degree. The snowball effect didn't stop there, as banks began
    to fold as loan defaults rose dramatically. As banks stopped ...

  • 5 Must Read Finance Books - Investopedia.com

    http://financialedge.investopedia.com/financial-edge/1210/5-Must-Read-Finance-Books.aspx
    ... stay out of debt.". In particular, Ramsay is known his "snowball" strategy
    for getting out of debt. The strategy involves focusing ...

  • Capturing The Retail Trifecta

    http://stocks.investopedia.com/stock-analysis/2010/Capturing-The-Retail-Trifecta-PVHAROBKEURBNJCGGPSANFJCPRUE0324.aspx
    ... One thing's for certain: if you're not capturing the retail trifecta, you've got
    a snowball's chance in hell of gaining ground on your competition. ...

  • Bottom Of Cycle Stocks Require Patience

    http://stocks.investopedia.com/stock-analysis/2010/Bottom-Of-Cycle-Stocks-Require-Patience-KHD-TEX-AAPL-NUE0112.aspx
    ... For many people, owning a declining stock can snowball into a series of bad decisions.
    Cycles can be tricky. The real estate cycle is a case in point. ...

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