The Debt Snowball Method

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In September, I plan on paying off some of my debt. I have a few bills that I want to have paid off before January. Here was my debt earlier this year –> My debt.  Some of the amounts have gone down. A few have even gone up. I plan on doing the debt snowball to pay these bills off.

I learned about the debt snowball method while reading Dave Ramsey’s book “The Total Money Makeover“. The debt snowball is where you pay your debts from smallest to largest.  You make the minimum payment for all of the debts except for the smallest. With the smallest debt, you pay the minimum and anything extra that you can afford. Once that debt is paid off you add the old minimum payment from the first debt to the second debt. As you continue this step with all your bills, you will see that you are applying more to each debt. That way you will get out of debt quicker.

Here is an example of the method

Here is a person with three debts. You see the minimum payment and the additional funds for payment.

Credit Card –  $100 balance –  $25 minimum per month

Loan A – $300 balance – $25 minimum per month

Loan B – $500 balance – $50 minimum per month

The person has an extra $25 per month to help with the repayment of debt.

The payments would look like this during the first two months of the debt snowball method

Credit Card – $25 minimum plus the $25 additional

Loan A – $25 minimum

Loan B – $50 minimum

Month 3

The credit card was paid off after month 2. Here are the remaining balances on the loans.

Loan A  -$175

Loan B – $350

This is what the payments would look like.

Loan A – $25 minimum per month + $50 (originally the payment for the credit card)

Loan B – $50 minimum per month

At the 6th month loan, A would be paid off. The $75 from that loan would then be added to loan B making the new monthly payment $125. By month 8 all of the debt would be paid off.

My debt snowball will take a couple years to complete. I will be in 2 weddings (September & January). Also, I have to save money for my New Year’s Eve trip. I want to be able to pay off my debt and still have some type of fun. I am dedicated to making it happen.

What ways have you paid off your debt? Did you use the debt snowball method or something else? Were you able to still do things while paying off debt?



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  1. I used to do what you showed in your example. I found loan consolations were very helpful at times as long as I didn’t use credit cards and rebuild a balance again. Now I am lucky enough to pay for stuff as I go. The funny part is it actually has given me the resources to do more in the long run. 🙂
    Susan Cooper recently posted…Destinations: MusingMy Profile

  2. I like the snowball effect – I hope he takes into account the interest rates as well because if you have a high debt but 0% interest rate and low debt with say 18% interest rate – I think ya gotta pay off the low debt.

    Good luck paying off that debt.
    Joanne recently posted…10 Tips for the new school yearMy Profile

  3. Hi Jason – this is the first I’ve heard of the debt snowball method! I managed to pay off my largest debt bill a few weeks ago. It’s such a great feeling to have it out of the way. So I might try this new method with my last iddy-biddy debt. Great advice Jason – thanks.

  4. This is a good strategy, something I hadn’t seen before and will use. Hopefully my children won’t have to worry about debt but it may come in handy when learning how to bill pay anyway.

  5. I’ve never heard of this before but it makes complete sense. As in many financial situations, it takes self-discipline and goals. But the relief in getting out of debt! Consumers are in more debt than ever, so thank goodness for ideas like this. I may just give it a shot …
    Krystyna Lagowski recently posted…Concerto in the key of CamaroMy Profile

  6. Great job tackling your debt! I paid off my credit cards a few years ago and it fells great! Now I make sure I pay them off every month (even if it means dipping into some savings to do so).

  7. Smart advice and so easy to do. I tried this approach a while back and I’m amazed at how well (and surprisingly how fast) it works.
    Debra Yearwood recently posted…Our PeopleMy Profile

  8. This is so simple and yet I have never thought of it!
    Unfortunately, I only have debt on two mortgages so they are all large. However, this will still work when the first one is paid off, then I can transfer that payment to the next one. So simple, why didn’t I think of it? Come to think of it, I actually did do this recently when an investment loan was paid off. I transferred that money to one of the mortgages. Ah, I’m not so dumb after all 🙂 🙂 🙂
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