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.
*This post contains affiliate links. For more information, see my disclosures.
One of the best things you can do for your life and your finances before starting to pay off debt is to become fully aware of where all of your money is being spent.
Often times we aren’t even aware where our money is going every month which is what usually leads to things like credit card debt in the first place.
If you need more help keeping a simple, but effective budget, duse coupon code BUNDLE20 to save 20% on my Fun Sized Budget Bundle. There are 18 easy-to-use printouts, including debt payoff printouts, plus a video tutorial that walks you through how to use each one.
Before you get started with the Debt Snowball, there are a few things I always recommend looking into that could help you reduce the amount of debt you have and could also reduce your monthly payments.
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.
Build a Bucket List Budget
I created a course that walks you step by step how our family was able to free up an additional $40,000 per year without working more hours!
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.
Reduce your phone plan
There are companies and strategies that will help you significantly lower the cost of your phone plan each month so you have more money to put toward debt payoff.
Reduce your food budget
Chances are you are spending way more on food each month than you realize. Grab my free Shop Your Pantry guide to learn how to shop smarter or get a pre-planned grocery list and meal plan from the $5 Meal Plan.
Sell stuff online
A great way to make more money every month is by decluttering some of what you currently have. When it comes to big-ticket items like electronics, I have found a lot of success with the Mercari app.
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.
Get 17 more printouts in the Fun Sized Budget Bundle including the Debt Snowball printout. Use the code: BUNDLE20 to get 20% off.
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.
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.
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