Congratulations!  You might be reading this because you’ve found yourself in debt.  I’m not congratulating you on borrowing money, but I AM congratulating you on seeking out a plan to tackle this debt so that it doesn’t tackle you.  Our family successfully paid off way too much debt using the debt snowball method.  I’m happy to say that we made it out alive and I know that you can too!

What Is A Debt Snowball?

Imagine a ball of snow rolling down a hill.  As it continues to roll, it picks up more snow and grows larger by the second.  This is the illustration behind the debt snowball.  It’s a method of paying off debt in a certain order.  As you pay off each debt, the minimum payments for previous debts are added to your payment for larger debts.  Eventually, you are left with one large payment to your last debt.

How Does It Work?

  1. Write out a list of all your debts from smallest to largest.  Don’t worry about minimum payments or interest rates.  
  2. Pay the minimum payment on each loan, but pay any extra money you can to your smallest debt.
  3. Find extra money by budgeting, working an extra job, or selling things around your house that you don’t need.  Immediately send that money to your smallest debt.
  4. As you pay off your smallest debts, take that monthly payment and add it to your next smallest debt payment.  
  5. Pay off your next debt (Way to go you!).
  6. Keep the process rolling until you have one last debt.  Pay that bad boy off and then celebrate!

Example of Our Debt Snowball

Below is an example of our debt snowball when we had 3 loan payments remaining.

What’s Really Happening

We started by paying the minimum monthly payments on the car loan and student loan B.  We then not only paid the minimum payments for student loan A, but we took any extra penny and chunked it at that loan.  My husband and I never made just the minimum payment.  Instead, we found extra money and lived below our means so that we could pay much more than the minimum.  This accelerated our debt payoff for that loan.  Then, when Student Loan A was toast, we tackled the car loan in the same way.  

Although the debt snowball method might seem simple and too easy, the magic behind it is the motivational high five you get when you pay off one of your loans.  That moment when you see “paid in full” flash across your computer screen is like an energetic fist bump that traveled through time and space to make it to your side of the internet.  It provides you with the encouragement to keep going.  It’s a whisper in your ear that says “Hey you! I know you can do this.  Debt sucks and you’re rid of one more debt payment.”  Take a moment to celebrate (but choose a free celebration, not something that costs money) and keep up the fight.

Debt Snowball Tips To Keep You Going

Trust the system.  

This is like a team building trust fall.  You are supposed to fold your arms across your chest, fall backward, and trust that the debt snowball will catch you.  Don’t question it.  Don’t let others question it because it’s not their debt!  Only allow them to question your ways if they are willing to make your monthly debt payments.  Once you start making progress, you’ll see a world of a difference in your overall debt payments and your motivation.

Don’t increase your standard of living.  

If you’re like us and had 5 or more loans, it’s easy to increase your standard of living when you have paid off one and no longer owe that monthly payment.  Just don’t do it.  Act like that money doesn’t exist.  You’ve lived without it for so long.  You don’t need it now.  Just keep your standard of living the same and transfer that extra money to your next lowest debt.

Don’t celebrate each loan payoff by spending more money.  

I’m totally guilty of this one!  I’d pay off another loan and want to reward myself by buying something new.  I felt like I deserved something extra.  It was my personal pat on the back.  Find a way to reward yourself without spending money.

Track Your Progress.  

Our family kept track of our debt free journey with a debt thermometer.  Over the years I found that there were times when I just needed to head to our closet where it still hangs and glance at how far we had come.  I was able to keep going and it was a wonderful visual to where I knew we were headed.

Budget, Budget, Budget.  

If you know me, you know I love budgeting.  Seriously, I wish I could hop through this computer screen and make your budget for you.  Unfortunately, the internet is not as sophisticated as I had hoped and I cannot easily transport myself to you in that capacity.  Instead, you will have to make your own budget.  Read more about the easiest way to write a budget and what you might be missing in your budget.  The more you are in charge of your money, the more progress you make.  Remember, money doesn’t control you; you control your money!

If you have found yourself owing money to people you don’t even know and you’re sick of it, then try out the debt snowball.  Besides, what do you have to lose?