Why do I pay off my debt starting with the lowest balance instead of the highest interest rate?

The debt snowball focuses on motivation and momentum. Paying off the smallest balance first creates an early win and frees up money to apply to the next debt.

How long should Baby Step 2 take?

Most people who fully commit pay off all nonmortgage debt in about 18–24 months when they combine the debt snowball with a written budget.

Should I keep saving for retirement while on Baby Step 2?

No. Ramsey recommends temporarily pausing investing, including the employer match, while working Baby Step 2 so your available money can go toward eliminating debt.

How do I get out of credit card debt?

Use the debt snowball, stop using credit cards, follow a budget and control your spending. Avoid moving the debt to balance transfers, personal loans or new credit cards.

Where does an IRS bill fit into the debt snowball?

Ramsey recommends putting tax debt at the top of the debt snowball regardless of its balance and dealing with it before the other debts on your list.

If I already have money saved, should I put that toward my debt snowball?

Keep $1,000 for your starter emergency fund and use additional nonretirement savings to pay down nonmortgage debt.

Do I pause the debt snowball if I have to use my emergency fund?

Yes. Pause the debt snowball, make minimum debt payments and rebuild the starter emergency fund to $1,000 before restarting the snowball.

What if my spouse isn’t on board with Baby Step 2?

Money decisions in a marriage should be made together. Ramsey recommends sitting down together for a Budget Committee Meeting and agreeing on a small first win.

What if I can’t make minimum payments or have debt in collections?

Contact creditors to discuss hardship programs or payment plans, prioritize the Four Walls of food, shelter, utilities and transportation, and put available extra money toward the smallest debt.

Pay Off All Debt With the Debt Snowball (Except the House)

Baby Step 2 is all about debt. You’ve been told debt is normal—or that you need it to build credit. But that lie keeps you living paycheck to paycheck, wondering when it’ll end. The truth is, debt is a burden, not a tool.

Here’s what you’ll find on this page: how to pay off debt, how the debt snowball works, how long it takes, and answers to the most common questions before you get started.

Illustration of Debt Snowball Rolling Downhill

What Is Baby Step 2 (and What Debts Does It Cover)?

Baby Step 2 is where you pay off all debt (except your mortgage) using the debt snowball method. List out your debts from smallest balance to largest (ignore the interest rate) and attack the smallest balance first while making minimum payments on the rest. As you pay off each balance, roll that payment into the payment on the next debt until you’re debt-free! It takes most families 18–24 months to get rid of their debt with the debt snowball.

Debts included in Baby Step 2:

Credit cards
Student loans
Auto loans
Medical debt
Personal loans
IRS or back tax debt

Not included: The mortgage. It doesn’t belong in your debt snowball because you’ll tackle it separately, in Baby Step 6, once every other debt is gone.

Why It Works

Quick wins create momentum. As soon you as pay off that first balance, you’ll feel motivated to pay off the next—and the next. And as your payment grows, each one is easier to knock out.

The Payoff

When you don’t have payments, you have more money to save, invest, and build the life you want. Millions have changed their money habits this way. You can too.

A photo of Jerry and Brenna who paid off $87K. Jerry and Brenna paid off their debt. You can too!

A photo of Chuks and Virginia who are debt free! Chuks and Virginia are living like no one else. You can too!

How to Pay Off Debt Using the Debt Snowball

The debt snowball method, combined with your EveryDollar budget, is the fastest way to pay off debt. Whether you’ve got student loans, credit card debt, car payments or all of the above, you can get rid of debt—one step at a time.

Save $1,000 for your starter emergency fund—Baby Step 1.
List your debts from smallest to largest, regardless of interest rates.
Put any extra money you find in your EveryDollar budget toward your smallest debt.
Make minimum payments on your other debts until the smallest is gone.
Take the payment from the smallest debt and add that to your payment on the next-smallest debt until it’s gone too.
Watch that payment flatten every debt in its path.

Budget With EveryDollar

Debt Snowball vs. Debt Avalanche: Why Smallest First Wins

You’ve probably heard of another method, the debt avalanche, where you pay off debts starting with the balance with the highest interest rate. On paper, it saves you a little more in interest. But personal finance isn’t just math—it’s behavior. If this was about math, you probably wouldn’t have gone into debt in the first place.

The debt snowball has you pay off your smallest balance first, regardless of interest rate. That quick win keeps you motivated, and the momentum builds as you knock out each debt. The avalanche method might save you a few extra dollars, but if you lose steam and quit halfway through, those savings don’t matter. The debt snowball gets people to the finish line—and finishing is what actually gets you debt-free.

Photo of couple holding a phone. Text that says Maranda & Tyler T, Ramsey Customers.

Calculate Your Debt-Free Date

Pop your numbers into the Debt Snowball Calculator to see your debt-free date. And stay with us—we have a few smart tips below to help you knock it out even faster.

“Debt steals your peace, but you get to decide you’re done with it—and when you do, you get your life back.” —Dave Ramsey

Put Your Snowball Into Overdrive

Stop adding new debt (cut up your credit cards).: You can’t climb out of a hole by digging out the bottom. That means saying no to more debt! Cut up the credit cards and stop borrowing so your income can finally start working for you.
Find hidden money in your budget.: If you don’t tell your money where to go, you’ll always wonder where it went. Ramsey’s budgeting app EveryDollar can help you find extra money hiding in your spending. And that gives you more money to throw at your debt.
Cut your grocery bill by meal prepping.: If you tend to overspend on food, you’re not alone. With grocery prices on the rise, it’s even more important to be careful about your food budget. Meal planning tames your food budget in two big ways: First, you head to the store with a plan and if you stick to it, you’ll only buy what you need for the meals you’ve planned. Second, since you know what you’ll be having for each meal, you’re less tempted to swing by the drive-thru.
Sell so much stuff the kids think they’re next.: Do you have a few things sitting around collecting dust while your debt is collecting interest? Sell what you’re not using and turn all that clutter into cash. You’ll lighten up your space and knock out a balance at the same time.
Pick up a side gig.: Paying off debt can feel like a grind. But the extra dollars you earn from a side hustle like pet sitting, tutoring or grocery delivery can move your debt-free date closer than you think.
Tap any savings above $1,000.: We know it sounds weird to dip into your savings, but that’s what paying off debt is all about—being weird! Use any nonretirement savings above your $1,000 starter emergency fund (Baby Step 1) to knock out as much debt as you can. Once you’ve kicked debt to the curb, you’ll rebuild your savings in Baby Step 3.
Pause your 401(k) contributions—temporarily.: If you’re on Baby Step 2, every dollar in debt payments is a dollar that isn’t building your future. Investing while you’re still in debt is like trying to fill a bucket with a hole in it—you’re pouring money in the top and watching it drain out the bottom.

Debt is charging you 7%, 15%, sometimes 20%+ in interest. Investing might earn you 10–12% on a good year, so that high interest debt is keeping you from building real wealth.

That’s why we say to pause investing until you’re debt-free. Yes, that even includes your employer match. It’ll be there waiting for you at Baby Step 4, and you’ll catch up fast once debt isn’t eating your income.

That’s the math. But the real reason we tell you to pause investing in Baby Step 2 is intensity. Half your effort on debt and half on investing means neither one gets what it needs. So go all in! Attack that debt with everything you’ve got until it’s gone.
Find your hype crew—people who keep you motivated.: Paying off debt is hard work, and not everyone will understand your goal. Make sure you have a few people in your life to cheer you on.

Real People Who Paid Off Their Debt

“I paid off $121,000 in 28 months. I feel strong! The
burden is gone!”

“Now, we talk more about our money, we make decisions together, and it’s not stressful anymore.”

“Budgeting gives you a true picture of your finances—of your life—so you can pick what you can do and plan all the good stuff.”

“I cried the first time we finished a month and actually had money left over. That had never happened before.”

“We’re not stressed anymore. Our journey’s in our hands now. We get to choose what we want to do.”

“There’s freedom on the other side of debt. You don’t have to live like everyone else. I wanted something different for my family.”

You Can Wander Into Debt, but You Can’t Wander Out

Where Does Baby Step 2 Fit in the 7 Baby Steps?

Baby Step 2 comes right after you’ve saved your $1,000 starter emergency fund (Baby Step 1). Once you’ve kicked debt to the curb for good, you’ll save 3–6 months of expenses (Baby Step 3), then move on to investing 15% for retirement (Baby Step 4), saving for college (Baby Step 5), and paying off the house (Baby Step 6). Then you’re ready to build wealth and give in Baby Step 7. That’s the goal of Dave Ramsey’s 7 Baby Steps—to set you free to live and give like no one else.

Image of the Get Started Assessment that maps you to what baby step you are on

Debt-free couple with a sign that says "Cash Flowing Our Future"

It’s Time to Break Free From Debt for Good

Debt payments and a guess-as-you-go budget aren’t getting you anywhere. Break out of paycheck-to-paycheck living and the stress of wondering if you’ll make it to the next payday. That’s no way to live, and you don’t have to stay there another day.

Baby Step 2 is part of Ramsey’s 7 Baby Steps—the plan millions of families have used to escape debt and build wealth that lasts. Make sure you’re in the right place by taking our Get Started Assessment today.

Find Out What Step You’re On

Frequently Asked Questions

Why do I pay off my debt starting with the lowest balance instead of the highest interest rate?: The debt snowball is built on motivation, not math. Paying off your smallest debt first gives you a quick win and frees up cash fast—creating momentum that builds like a snowball rolling downhill until every debt is gone.
How long should Baby Step 2 take?: Most people who go all in pay off all their debt (except the house) in 18–24 months. That timeline holds when you pair the debt snowball with a real, written budget—because a budget tells your money where to go instead of leaving you to wonder where it went.
Should I keep saving for retirement while on Baby Step 2?: No. Pause all investing, even the match. While you’re in Baby Step 2, all your energy and money go toward debt. It’s only temporary. Once you’re debt-free with a full emergency fund, you’ll more than make up for the time off.
How do I get out of credit card debt?: The debt snowball is the fastest way out of credit card debt. Cut up the cards, get on a budget, and control your spending. Skip balance transfers, personal loans and new credit cards. Those just dig the hole deeper.
Where does an IRS bill fit into the debt snowball?: Tax debt always goes to the top of your snowball, regardless of the balance. The IRS can take money from you first and ask questions later, so settle up with them before tackling anything else on your list.
If I already have money saved, should I put that toward my debt snowball?: Yes, but keep $1,000 back for your starter emergency fund first. Use the rest of your nonretirement savings to attack nonmortgage debt. Never touch retirement funds unless you’re facing bankruptcy or foreclosure. The tax hit and penalties will cost you more than the debt itself.
Do I pause the debt snowball if I have to use my emergency fund?: Yes, pause your snowball until your emergency fund is rebuilt. Make minimum payments on your debt in the meantime. Once you’re back to $1,000 in savings, restart your debt snowball right where you left off.
What if my spouse isn’t on board with Baby Step 2?: You can’t budget alone in a marriage. Money decisions are made together, every month, before it begins. Sit down for a real Budget Committee Meeting, not a debt lecture. Agree on one small win first.
What if I can’t make minimum payments or have debt in collections?: Call your creditors before they call you. Explain your situation and ask about hardship programs or payment plans. Keep your budget and Four Walls (food, shelter, utilities, transportation) locked in, then throw every extra dollar you can find at your smallest balance.
Have a different question?: Try our Ask Ramsey tool, powered by Ramsey AI. And to speed up your debt payoff journey, create your budget in EveryDollar and get personalized recommendations to keep the momentum going.