If you have a bunch of outstanding debts and you have no idea how to begin to pay them off, the debt snowball method might be your best bet.

This method, made popular by financial guru Dave Ramsey, gives you a way to put momentum to work for you. If you can feel your efforts snowballing, you’re much more likely to stick with them.

Let’s take a look at how the debt snowball system works.

What Should I Do First?

The first thing you should do is get a complete list of all the debts you owe and what the minimum payments are for each one. Go old school and write it down in a notebook if you want. Or you can create a spreadsheet on the computer with that information where you can track your progress.

You should put every kind of debt you owe on this list – even the “good” kind like your mortgage. Put your car payment, personal loan, credit cards, and student loans on this list.

When making your list, put a star by the one you owe the least amount of money to – not the one with the highest interest rates on the debt. That’s the bill you’re going to start to pay off first.

How Do I Do It?

Once you’ve identified the debt you owe the least amount of money to, you can start to pay it off. Pay just the minimum payments on all your other debts and not a dollar more. The idea is to aggressively target your lowest bill because it will be paid off the fastest. That will make you feel great because you’ll see an immediate payoff for your efforts.

So while you’re paying only the minimum on your other debts, put every single dime you can toward your lowest debt. Any spare money you find should only go toward paying this bill off. You can cash in your spare change, sell some clothes you no longer wear, or only shop the grocery sales at the store for a few weeks.

You need to dive right in and pay that bill off as fast as you can.

Then What?

Once that debt is out of your way, you should start to focus on your others. Pick the debt with the lowest balance out of those remaining on your list. Then take all the money you were putting toward your first debt before paying it off and put it toward your new target.

When that debt is paid off – whether it takes months or years – you move onto the next one.

You keep targeting new debts as you pay off the old ones. When you get to the final debt, which may be quite sizeable if it’s a car, student loan, or mortgage, just remember it may take a while. Try not to get discouraged about how far you still have to go. Instead, think about how far you’ve come and how good you feel about what you’ve managed to accomplish with your finances.