Debt Snowball Helped Us Pay off $6,000 of Debt in 6 Months

You may or may not have heard of Dave Ramsey’s Debt Snowball, but if you have, believe me, you’re going to want to hear how we managed to make the snowball even faster. In just 6 months, we were able to pay off over $6,000 worth of debt! If you had told me 5 years ago that I would be able to pay off an average of $1,000 per month of debt I would have told you you were crazy. We were living paycheck to paycheck. There was no way. Here’s the breakdown of how we made it happen and how you can too.

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How to pay off debt fast.

Starter steps to paying off debt

Before our family started paying off debt, I am so thankful I learned how to first prep myself so that debt payoff would be easier and less stressful.

Here are the steps I recommend to get you started:

  • Do a spending inventory so you know where your money is going every month. Don’t forget things like gas and groceries!
  • Create a budget based on your spending inventory. Don’t forget to allow for wiggle room and fun spending!
  • Ensure you have a solid emergency fund in place. Most experts recommend between $1,000 and $6,000 to get started.
  • Track your bills, savings and debt payoff (Get my budget printouts)

One thing most of us do while we are getting ourselves in debt is to completely ignore our bank accounts because we know we won’t like what we see.

You know what they say, you can’t get to your destination if you don’t know your starting point.

As painful as it can be, make sure you face your finances head on before jumping into debt payoff.

Saving/Investing as you go

Following the Dave Ramsey steps, the “rules” were technically not to continue investing while paying off our debt. I am so thankful Tom insisted on putting his foot down because as I expanded my financial knowledge I understand how powerful compounding interest can be. (AKA our money makes more money.) Check the FSL Book Store to get my favorite financial book recommendations.

Another mistake I wish we had been smarter about was saving the recommended $1,000 and that’s it.

Throughout our debt payoff process we continually ran into financial hardships that would drain our emergency fund. Because our savings would dwindle, we were forced to constantly re-build it. Had we chose to set aside a $100 per month to keep beefing up our savings, we might not have had as many set backs.

Another good idea (always) is to open a savings account that is separate from your current bank account. The online Savings Builder account with CITBank is perfect because they have high-yield accounts that you can open for as little as $100 per month. Open a Savings Builder account to save $100 per month.

How to pay back less

When our family started the Debt Snowball method, no one mentioned to us that a good idea to help save money and speed up the debt payoff process is to get a lower interest rate especially on things like credit cards.

I wish we had known about this as you can easily find scripts online to help negotiate interest rates.

Negotiations are definitely a smart tactic, but unfortunately they don’t always work. That’s why it can be good to have a backup plan.

When to consider consolidating

If you have a significant amount of debt to pay off like we did, (we had a $12K credit card bill on top of car loans, student loans etc), it might be worth looking into taking out a loan with a lower interest rate or consolidation. Click here to get an estimate with LendingTree.

By taking out a loan to pay off our credit card we were able to go from a 25% interest rate to an 11%! That was a huge load of my mind because it felt like we were actually able to make a dent in that debt while we focused on paying off our other debts.

How does the Debt Snowball work?

Ok, that was a lot of pre-game info, but I want to make sure you have all the information before we go on.

Here’s the quick breakdown of how the Debt Snowball works.

  1. Apply $200 to your smallest debt
  2. Pay off the smallest debt
  3. Begin working on next smallest debt

Finding an extra $200

The first step in starting the Debt Snowball is finding an additional $200 per month to put toward debt. A lot of people believe that finding extra money means working more. In reality, there is a good chance you already have $200 hiding in your budget.

Strategies for finding $200

Do a spending inventory

Going through your budget and doing a spending inventory can help you get clear about where you are currently spending your money. After you’ve done that, you can more easily decide areas where you could cut back or reduce spending.

Cut your monthly expenses

One of the best and fastest ways to get more money in your budget is by cutting those expenses that you pay every month. Go through your budget and find ways that you can reduce or eliminate the expenses that you pay for every single month. Top areas to cut:

  • Subscription fees
  • Reduce grocery budget
  • Cut back on out-to-eat expenses
  • Review and eliminate your $10 and below purchases

Generate additional income

I started a few different side hustles in order to help accelerate our debt payoff. These are jobs I was able to do from home while raising kids and homeschooling! 10 Things I Did to Make Money From Home.

Get money for your clutter

Another thing we did to make extra money to help pay off debt quicker was to sell a lot of our items. Between downsizing our house and paying off debt our family of 5 easily eliminated half of our possession which relieved so much stress and helped us make some extra cash.

If you love the idea of learning how to flip thrift store items or make money from your clutter, our friend, Amanda has an amazing course called Trash to Cash that helps you learn how to do this.

Amanda was even able to travel the US for nearly an entire year solely of flipping while on the road! How cool is that? Learn how to sell your clutter.

Organize your Debt Snowball printout

Grab the Debt Snowball Printout here to get started and follow along, or you can snag more debt printouts in The Budget Bundle if you feel like you need a little more help with organization and tracking!

Once you have your $200 extra per month, the Debt Snowball gets pretty simple. I recommend downloading my Debt Snowball printable to help you keep track of your debt payoff and to get an idea of how quickly you can pay off your debt.

The Debt Snowball helped us pay off debt in 6 months. If you need to get out of debt, try the Debt Snowball and use my free printout to get you started.
Don’t forget to download your Debt Snowball Method Printout at the end of this post!

How to fill out the Debt Snowball printout:

  1. Write out your debts – In the top column of the Debt Snowball Printout, write out your debts with the biggest debt in box #1. The #2 box will be your second largest, and so on and so on.
  2. Fill in your totals – Below each of these, fill in your total balance owed for each debt.
  3. Enter your monthly payment amount – Below that, fill in your minimum monthly payment for each debt.
  4. Apply your $200 – Lastly, you are going to take your $200 and apply it to your smallest debt first.

Applying $200 to your smallest debt

As you can see below, our $300 credit card was our smallest debt.

Our minimum monthly payment was $30.

By adding the additional $200 to that $30 we were able to put $230 toward our smallest debt of $300.

*Remember, you can always put more money toward debt if you are able to! This will help you pay off debt faster and save you from additional interest!

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What if you have money left over?

As you can see, after we finished paying off our remaining $70 from our credit card, we took the remaining $160 and applied it to our next smallest debt.

Getting the debt snowball rolling

Once we paid off our smallest debt, we were able to take the full $230 that we applied toward it and begin putting that money toward our next smallest debt.

Because our minimum payment for our next smallest debt was $100, that gave us a grand total of $330 to apply toward that debt. Once that debt was paid off, we had $330 to begin applying to the next debt in line.

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Now we had racked up a huge debt snowball and it just rolled faster and faster.

By the time we got to our biggest debt it only took a little over a month to completely polish off that remaining balance.

When we were finished paying off debt in 6 months, we still managed to have an additional $210 leftover.

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Can everyone pay off $6,000 of debt in 6 months?

While we were able to get out of debt $6,000 of debt in 6 months, this isn’t going to be the case for everyone. Depending on the amount of debt you have, your income, and your motivation, debt payoff will look differently for everyone.

What do I do after I pay off my debt?

Do not fall back into those nasty habits that got you into debt in the first place! This can be so easy to do as money management is largely a mindset issue!

Be sure to check out the FSL Book Store to get my favorite financial book recommendations so you can learn how to use money as a tool to support your financial freedom and get you out of the paycheck to paycheck mindset for good!

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The Debt Snowball helped us pay off debt in 6 months. If you need to get out of debt, try the Debt Snowball and use my free printout to get you started.

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24 COMMENTS

  1. Gloria Harvley | 9th Nov 17

    This is really awesome! I’ve used the Dave Ramsey Method before but didn’t always stick with it. I definitely can ‘t wait to try this method!

    • heartsoulwhole@gmail.com | 9th Nov 17

      Same here! When we did stick to it though…ahhhh feels so awesome to be done with all of that debt.

  2. Lauren | 9th Nov 17

    Holy moly, that’s incredible! I have heard of this method before but I haven’t used it yet. Thank you so much for sharing this story, you have inspired me to check out my finances tonight!

    • heartsoulwhole@gmail.com | 9th Nov 17

      You are welcome. I hope you can find some wiggle room to make some improvements!

  3. Kim | 9th Nov 17

    Love this! My family is debt free, but we weren’t ALWAYS that way. I will be sharing this with my not so financially sound friends as well!

    • heartsoulwhole@gmail.com | 9th Nov 17

      That’s awesome to hear! Talk about life goals!

  4. Prerna Garg | 9th Nov 17

    Getting a side hustle and creating a monthly budget really helps multiply the income and work on the debts. Really helpful post!

    http://www.allshethings.com

    • heartsoulwhole@gmail.com | 9th Nov 17

      Thanks! Glad you liked it! Have a good day!

  5. Kristin | Life of Stones | 9th Nov 17

    Wayyyyy to go!!!! We recently paid off $35,000 using Dave’s steps…feels so great! Congrats to you!!

    • heartsoulwhole@gmail.com | 10th Nov 17

      That is awesome!! How exciting for you guys!

  6. Sincerely Ophelia | 10th Nov 17

    This is interesting. Def need this for my credit card bills!

    • heartsoulwhole@gmail.com | 10th Nov 17

      Give it a try! It’s really great to watch all those bills fade away!

  7. Mary | 10th Nov 17

    This is really handy!

    • heartsoulwhole@gmail.com | 10th Nov 17

      Thanks so much! Have a great day!

  8. Emma @ Muddy Boots and Diamonds | 10th Nov 17

    Thank you for this breakdown. It’s something I have in mind to do for my credit card. Target and eating out are my downfalls. I’m really trying to cut back on the eating out. And I gave myself a pat on the back for returning something to Target and NOT buying something else 🙂

    • heartsoulwhole@gmail.com | 10th Nov 17

      That is impressive. I may or may not have made a tiny splurge at Target today too! (face palm) It was in the “dollar section” though so…it’s all good, right?

  9. Eunice Ann | 10th Nov 17

    So helpful. Thank you for this clever idea. 🙂

    • heartsoulwhole@gmail.com | 10th Nov 17

      You bet! Glad you liked it!

  10. Chad | 10th Nov 17

    Very cool idea, thank you!

    • heartsoulwhole@gmail.com | 10th Nov 17

      You bet! Have a good one!

  11. sarah | 14th Nov 17

    hello i was trying to download the printout but it doesn’t have the columns?? is this on my end??

    • heartsoulwhole@gmail.com | 14th Nov 17

      Hi Sarah,

      Thank you for bringing that to my attention! Not quite sure how that happened, but it should be all fixed! I will email you the printout as well to ensure that you get it. Thank you, Renee

  12. Linda | 18th Nov 17

    Need to specify that you need an extra $200 per month. Took me a while to figure this out.

    • heartsoulwhole@gmail.com | 19th Nov 17

      I’m sorry if that wasn’t clear.

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