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 put $1,000 per month toward 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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Before you get started with the Debt Snowball, I highly recommend looking into debt consolidation if you have multiple debts through different companies.
One of the first things we did before paying off debt was to take out a loan to get a lower interest rate. Another option is debt consolidation.
If you’re worried about taking out a loan or are looking for alternative ways to lower your payments, you can always try negotiating your interest rates.
Grab my FREE negotiation scripts that will walk you through how to talk to your credit card company about lowering your interest rate.
I’m going to try to keep this cut and dry. The idea of the debt snowball is all about starting small and accumulating more and more (payoff) as you go. A quick run down looks like this:
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.
If you feel stuck in a vicious paycheck to paycheck lifestyle, Join the Waitlist for my Bucket List Budget course and gain tips and insights on how to plan a budget that works
Grab the Debt Snowball Printout to get started!
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.
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!
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.
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.
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.
We were able to get debt free in 6 months and we found ourselves with an additional $930 a month!
Even if you skim off that additional $200, there is still a $630 surplus in our bank account each month!
Using the Debt Snowball to get out of debt definitely requires discipline, but has a huge payout if you can stick to it!
It has been over a year since we were able to dig ourselves out of this much debt in just 6 months and I am still amazed at how easy it really was and how great it felt to watch those numbers get smaller and smaller each month.
While we were able to get out 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.
My best advice is, if you struggle with impulse control and shopping addictions, then the Debt Snowball is the debt payoff method for you!
It works so nicely because paying off your smallest debt gives you the quickest reward — just like shopping — except in reverse.
Don’t forget to join my Fun Sized Budgeters Facebook group to help keep you motivated, get advice from like-minded people and stay plugged
Some people truly believe that some debt is ok and it’s just a part of life. While it may sound harmless in theory, it can be detrimental to your finances and could really be holding you back from living out the life you really want.