Throwing snow at the debt!


You have your starter emergency fund you learned about in the “Do You have Financial Security in an Emergency” article, you’ve been doing a MONTHLY budget you learned about in the “Do You Know Where Your Money Is Going” Article, and you’ve been using envelopes to control spending you learned about in the “Envelopes, Envelopes everywhere!” article, but how are you managing that debt? Well it’s time we tackle it. Most everyone has accepted the best way to get out of debt is called the “Debt Snowball.”  It’s a fairly simple theory, to pay it off, and pay it off quicker than those pesky minimum payments will ever get you, you follow only a few small steps.

  1. Write down your debts and the minimum payments, smallest balance to the largest, on a piece of paper.  debt-snowball-example
    Don’t write down your interest rate, as it’s not going to play any part in this equation. You see, logically and mathematically, this simplest way to pay off debt doesn’t make sense. It makes sense to pay off the highest interest rate first because you save the most money this way.  I’m a logical and mathematical person so paying off the highest interest rate first was my biggest inclination.  The problem with being logical and mathematical is if we did the math and logic to begin with, we wouldn’t be in debt in the first place!  Paying off smallest balance to largest is purely an emotional method because you’ll stay motivated throughout this process.  Stop thinking, do it the non-logical way, it won’t save you the most money, but will get you keep you going!
  2. Any and all extra money you can account for should go to that first debt, the one with the smallest balance. Go ahead and write the total amount you can pay next to the smallest debt including the minimum payment (i.e. minimum payment is $50, extra money is $150, total payment is $200).  Every little penny helps here: sell your stuff, work a 2nd or 3rd job if you’re wanting to get out as fast as possible.  You’re not entitled to anything except what you work for, if you want to get out of debt you have to work for it.
  3. Pay that amount on your smallest debt until you pay it off.
  4. Celebrate! You just paid off the first debt in your snowball and there is nothing better than rewarding yourself as you pay off the debt! Go out to a nice dinner, go bowling, go have a good time because you’re one step closer to being out of debt.  Whatever you do though, pay cash!
  5. Get back to work.  You’ve celebrated and now it’s time to move the snowball some more.  You now have $200 a month freed up, so you simply move that money to the next smallest balance of debt.  You add that $200 to the minimum payment you were paying before and now you’ve got a small snowball knocking out debt.  Faster and faster you’ll knock out those debts until one day you’ll realize you don’t HAVE to pay anyone but yourself anymore!

And you’re done! You knock your debts out as fast as possible by paying off the smallest balance to the largest, and you become a rock star.  I read a bumper sticker on a car that said “Debt is normal, be weird.”   That should be your goal.  Get out of debt and don’t go back! RUNNNNNN!!!!!! You don’t have to live your life in debt like the rest of society wants you to believe, the Bible says the debtor is SLAVE to the lender! Don’t be a slave, get out and stay out of debt. Manage those finances God’s way. Thank you.

Please share below some of your success stories as well.  We love hearing freedom stories and rooting you on through your journey to be financially free!

You can also contact us today to assist you in getting a snowball set-up and information for your estimated payoff.  We’re happy to help and don’t break the bank to do it for you either! Click HERE for more assistance.
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