The Snowball Method: A Step-by-Step Debt Payoff Guide for Filipinos

When you’re juggling credit card bills, a Pag-IBIG loan, installment payments, and money you borrowed from family, debt can feel overwhelming. You’re making minimum payments on everything, but the balances barely move. Every payday, money goes out the door before you can even think about saving or spending on yourself.

The snowball method is one of the most effective ways to pay off multiple debts. It’s not the fastest mathematically, but it works because it keeps you motivated. You’ll see progress quickly, and that momentum helps you stick with it.

This isn’t about judging how you got into debt. Medical bills, family emergencies, job loss, or just trying to make ends meet can all lead to borrowing. What matters now is getting out.

In this guide, you’ll learn exactly how the debt snowball method works, how to set it up with your actual debts, and how to stay on track even when it gets hard. We’ll walk through the complete process from start to finish.

What Is the Debt Snowball Method?

The debt snowball method is a debt payoff strategy where you focus on paying off your smallest debt first while making minimum payments on everything else. Once that smallest debt is gone, you take the money you were putting toward it and add it to the payment on your next smallest debt. The payment gets bigger each time, like a snowball rolling downhill.

Here’s why it works psychologically: paying off that first debt, even if it’s small, gives you a win. That win motivates you to keep going. You see real progress fast, which matters when you’re dealing with something as draining as debt.

The alternative is the avalanche method, where you pay off the highest interest debt first. That saves more money in the long run, but it can take months to see your first debt disappear. For most people, the motivation from quick wins beats the mathematical advantage.

Step 1 - List All Your Debts

Start by writing down every single debt you have. Don’t leave anything out, even the money you borrowed from your sibling or the informal loan from a colleague.

What to Include

For each debt, write down:

Who you owe (bank name, lender, person)
Total amount owed
Minimum monthly payment
Interest rate (if applicable)
Due date

Include everything: credit cards, Pag-IBIG loans, SSS salary loans, installment purchases from Home Credit or Shopee, personal loans from lending apps, informal loans from family and friends, even overdue utility bills.

Organize by Balance

Once you have everything listed, arrange them from smallest balance to largest. Ignore the interest rates for now. The snowball method focuses on balance size only.

Your list might look like this:

Borrowed from family: P3,500
Shopee installment: P6,800
Home Credit: P12,000
BPI credit card: P35,000
Pag-IBIG loan: P65,000
SSS salary loan: P80,000

Step 2 - Calculate Your Available Money

Figure out how much money you can realistically put toward debt each month.

Add Up All Minimum Payments

Total up the minimum payments you’re required to make on all your debts. This is money you have to pay no matter what to avoid penalties and damaged credit.

Using the example above, if the minimums are:

Family: P500
Shopee: P680
Home Credit: P1,200
BPI card: P1,800
Pag-IBIG: P2,500
SSS: P3,000

Your total minimum is P9,680 monthly.

Find Extra Money

Look at your budget and find any extra money you can put toward debt beyond the minimums. Even P500 or P1,000 extra makes a difference.

Where to find it: Pack lunch instead of buying from the office canteen (saves P2,000/month), cancel unused subscriptions like Netflix or Spotify (saves P500/month), sell items you don’t use on Carousell, take on freelance work, or use part of your 13th month pay.

This extra money is your “snowball payment.” Let’s say you find an extra P2,000. Your total debt payment budget is now P11,680 monthly.

Step 3 - Attack the Smallest Debt

Now you’re ready to start the snowball.

Pay Minimums on Everything Except the Smallest

Continue paying the minimum on every debt except your smallest one. In our example, you’d pay:

Shopee: P680
Home Credit: P1,200
BPI card: P1,800
Pag-IBIG: P2,500
SSS: P3,000

Total: P9,180

Throw Everything Else at the Smallest Debt

Take all your remaining debt payment money and put it toward your smallest debt. In this case, you have P11,680 total minus P9,180 in other minimums, leaving P2,500 to attack the smallest debt.

Your family member gets P2,500 this month instead of just P500. At that rate, the P3,500 debt is gone in less than two months.

Celebrate the Win

When that first debt is paid off, acknowledge it. You just eliminated one entire payment from your life. That’s real progress.

Tell someone who supports you, mark it off your list, do something small to recognize the achievement. These moments of success are what keep you going.

Step 4 - Roll the Payment to the Next Debt

This is where the snowball effect kicks in.

Add the Old Payment to the New One

Take the entire amount you were paying on the first debt (P2,500 in our example) and add it to the minimum payment of your next smallest debt.

Before, you were paying P680 minimum on the Shopee installment. Now you’re paying P3,180 (the P680 minimum plus the P2,500 from the finished debt).

Your total monthly debt payment stays at P11,680, but it’s now concentrated on fewer debts.

Watch It Disappear Faster

The P6,800 Shopee balance will now be gone in about two months instead of ten. Each debt gets eliminated faster than the one before it.

Keep Rolling Forward

Once the Shopee installment is paid off, you take that P3,180 and add it to the Home Credit payment. Now you’re paying P4,380 instead of P1,200.

Then that payment rolls to the BPI card, then to the Pag-IBIG loan, then to the SSS loan. Each time, your payment power grows.

Step 5 - Stay Consistent

The hardest part isn’t understanding the method. It’s sticking with it month after month.

Set Up Automatic Payments

Automate as much as possible. Set up automatic payments for your minimum amounts on the due dates. For the debt you’re attacking, pay it as soon as you get your salary, before you can spend that money on anything else.

Remove the temptation to skip a month or reduce the payment. Make it automatic and you won’t have to rely on willpower.

Track Your Progress

Use a simple spreadsheet, notebook, or app to track your balances each month. Watching the numbers go down is incredibly motivating.

Some people create a visual tracker, like coloring in a chart or crossing off amounts. Find what works for you, but track it somehow.

Don’t Take On New Debt

This is critical: stop borrowing. Cut up credit cards if you need to, delete saved payment information from online stores, avoid installment purchases.

If you keep adding new debt while trying to pay off old debt, you’re running on a treadmill. The snowball only works if you’re not adding snow to the bottom of the hill.

You Can Do This

Paying off debt with the snowball method works. It’s been proven by thousands of people who were exactly where you are now, overwhelmed by multiple debts and unsure where to start.

The method is simple: list your debts, pay minimums on everything, attack the smallest, roll the payment forward. Simple doesn’t mean easy, but it means doable.

You will have setbacks. You will have months where progress feels impossibly slow. But every payment moves you closer to freedom, and every debt you eliminate makes the next one easier.

Start today. Write down your debts right now, organize them by size, and make your plan. Your future self will thank you for it.