Glossary
Snowball method
The snowball method is a debt payoff strategy where you pay extra toward the smallest balance first while making minimum payments on the rest. When that debt is gone, its payment rolls into the next smallest balance, creating visible wins and momentum.
The snowball method prioritizes behavior and motivation over pure interest math. You list debts by current balance from smallest to largest, make required minimum payments on each one, and direct any extra payoff money to the smallest balance. Once that account is paid off, the freed-up payment is added to the next balance on the list.
This approach can cost more interest than the avalanche method when the smallest balance does not also have the highest rate. The tradeoff is clarity. Closing an account quickly can make progress feel real, which helps some households keep making extra payments over a long payoff plan.
A useful snowball plan still needs accurate minimum payments, interest rates, due dates, and cash-flow assumptions. Nethaven's debt tools are designed to keep the plan close to real balances, so payoff projections are easier to compare with what actually happened.
Use this in Nethaven
This term connects directly to how people review money in the app. See debt payoff calculator for the related workflow.
Explore Debt payoff calculatorRelated terms
Avalanche method
The avalanche method is a debt payoff strategy where you pay extra toward the highest interest rate first while making minimum payments on every other debt. It usually minimizes total interest, but progress can feel slower if the highest-rate balance is large.
Cash flow
Cash flow is the movement of money into and out of your accounts over a period of time. Positive cash flow means income exceeded spending; negative cash flow means spending, debt payments, transfers, or investments exceeded incoming money.
Sinking fund
A sinking fund is money set aside gradually for a known future expense. Instead of treating car insurance, holiday travel, annual subscriptions, or home repairs as surprises, you save a smaller amount each month before the bill arrives.