When using the debt snowball in Baby Step 2 of the Baby Steps tracker at https://www.ramseyplus.com/track/baby-step/2 all of your debts will be automatically organized according to the debt snowball method.
If the initial debt in your debt snowball is not the smallest one, it is likely categorized as IRS debt. This is because we advise prioritizing the payment of IRS debt first, even if it is not the smallest debt. There are a few reasons for this recommendation:
- Their interest rates and penalties are incredibly high.
- They have virtually unlimited power to collect.
Put them at the top of your debt snowball and pay them first. It’s one of the few times we say to work the debt snowball out of order, which is normally smallest to largest.
Learn more about the strategy behind the debt snowball HERE.