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Data Shows Dave Ramsey Is Wrong About This Debt Advice - But He Did Nail One Thing

You might be approaching your debt repayment all wrong.

By Chris Lewis, CEPF , Edited by Calista Headrick

Updated Nov. 10, 2026

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Whether you do or don't immerse yourself in the world of personal finance, you've probably come across Dave Ramsey several times. The personal finance expert has spoken and written extensively about financial freedom to help people get out of debt.

The snowball method is one of his most popular approaches to managing debt. However, it's widely debated, with some experts arguing it might not be the best strategy. Below, we dive into the snowball method, highlighting why it falls short and what about it works.

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What is the snowball method?

The snowball method is a behavior-based debt management strategy that encourages individuals to pay off small debts before larger ones. Ramsey bases this approach on his argument that "personal finance is 80% behavior and only 20% head knowledge."

According to the financial expert, focusing on smaller debts gives you quick wins, showing you that it's possible to actually repay your debt. This, in turn, feeds your motivation, pushing you to repay even more.

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How the snowball method works

The snowball method is a structured process made up of the following steps:

Step 1: List all your debts by balance (from smallest to largest), ignoring the interest rate.
Step 2: Make minimum payments on all debts.
Step 3: Put any extra money toward the smallest debt until it's eliminated.
Step 4: Once you repay the smallest debt, move on to the second smallest and put any extra money into it (and so on until you pay back everything you owe).

How this works in practice

Let's say you have three active debts: a $2,000 personal loan with a $25 minimum payment and an 8% interest rate, a $6,000 auto loan with an $180 minimum payment and a 9% interest rate, and a $10,000 credit card debt with a $300 minimum payment and a 22% interest rate. Assume you can afford to pay $900 per month. Here's what to do based on the snowball method:

List your debts: personal loan ($2,000), auto loan ($6,000), credit card ($10,000).
Make minimum repayments: $25 + $180 + $300 = $505
Put the extra cash into your smallest debt: $900 - $505 = $395; put the $395 into your personal loan.

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Why the snowball method isn't always the smartest strategy mathematically

From a behavioral lens, the snowball method might work. However, mathematically, it isn't always the best strategy.

It calls for you to start by repaying the smallest debt and finish with the largest, regardless of their interest rates. In our example, you'd start with the 8% loan and put off the 22% credit card debt.

This might not be the smartest move, as you'd be ignoring the debt that grows the fastest. For instance, a $10,000 balance at a 22% interest rate accrues roughly $2,200 in interest per year, compared to about $160 per year on a $2,000 loan at 8%.

By focusing on the smaller, lower-interest debt first, the higher-interest balance continues to grow more quickly in the background. The longer you delay paying it down, the more interest you'll pay overall.

The snowball method vs. the debt avalanche method

From a mathematical perspective, the avalanche method might be a smarter alternative. The strategy calls for consumers to prioritize debts with the highest interest rates. This method might yield greater savings because it allows you to pay off expensive loans more quickly.

The trade-off is that you might not see much progress in your repayment in the beginning. Unlike the snowball strategy, the avalanche method requires more patience. You need to prioritize long-term savings over short-term satisfaction.

Today's debt reality

Today's household debt is at an all-time high. According to data from the Federal Reserve Bank of New York, the total consumer debt in the U.S. was $18.8 trillion at the end of 2025. This is a record-high figure, representing a $4.6 trillion increase since the end of 2019.

The rise in balances cuts across all major types of debts — credit card balances increased by $44 billion between the third and fourth quarter of 2025, retail cards and consumer finance loans by $14 billion, auto loans by $12 billion, and mortgages by $98 billion.

With debt levels rising, it's more important than ever for consumers to find practical debt management strategies.

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The debt advice Ramsey gets right

While Ramsey's snowball method might have its faults, the financial expert gets one thing right: consumers need to focus on repaying non-mortgage debt first.

Non-mortgage debt is financially draining. Most consumer debt has higher interest rates than mortgages, making it more expensive to carry over the long term. For example, the average credit card interest rate is 19.20% as of March 2026, according to Experian. In contrast, the Federal Reserve Bank of St. Louis notes that the current average rate of a 30-year fixed-rate mortgage is roughly 6%.

The risk of non-mortgage debt

Non-mortgage consumer debt could make you financially vulnerable. Its high interest rates might eat significantly into your income, potentially reducing your ability to save and invest.

Events like job loss or illness could increase your chances of falling into a debt spiral, where you're constantly borrowing, repaying, and borrowing again — just to keep up with expenses. Repaying such debts early could be the key to reducing your risk exposure.

Bottom line

With data showing that household debt is at an all-time high, it's more important than ever to find strategies that can help you withstand economic downturns. A single negative event, like job loss, might trap you in a debt spiral if you don't.

While Dave Ramsey's advice to prioritize non-mortgage debt does have merit, the core principle of the snowball method (focusing on small debts first) may not fit everyone's lifestyle. The avalanche method might be a better strategy in the long term, though that's something you have to decide.

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