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debt snowball

A debt snowball is an incredibly powerful way to pay off debt quickly and easily.  They are fairly easy to set up and use, and they are very powerful.  They can literally save you thousands in interest over the life of a loan and help you get out of debt years earlier.  I will even give you a debt snowball worksheet for free along with a list of my best tips to eliminate your debts, even really huge debt.

What IS a Debt Snowball?

A little background on how a debt snowball works.  It is a method to pay bills where you line up your credit card bills in a very strategic way.  As you pay off one bill, you take the money you would have paid on that bill and use it to make extra payments on the next bill, and so on.  It is widely acknowledged to be one of the best ways to quickly pay off large amounts of debt.  Dave Ramsey swears by them – he may have even invented them.  They are one of the big foundations of his debt program.

I’ve been using debt snowballs for the last decade to pay off $30,000 worth of debt.  Now you’d think after all that time, I’d be completely debt free.  But sadly, I’m missing one important element of the debt snowball.  To be really successful at it, you have to cut up or close your credit card accounts and stop charging on them altogether.  I’ve got mad skills for paying off debt, but not so much for resisting temptation.

It definitely requires a permanent change to your spending behaviors as well as your bill-paying behaviors.  I’ve got several posts you might find helpful for controlling your spending.

Toxic Money Behaviors

How to Overcome an Online Shopping Addiction

Bill Paying Strategies

How to Use a Debt Snowball

So, in a nutshell, here is how you do the debt snowball.  Let’s say these are your bills:

Bill A – I owe $2,500 and I pay $25/month at 5% interest

Bill B – I owe $4,000 and I pay $40/month at 8% interest

Bill C – I owe $6,000 and I pay $60/month at 9.5% interest

So, I’m going to pay just the minimum amounts on bills B and C, but I’m going to throw everything but the kitchen sink at Bill A.  I will work extra hours, have garage sales, save money on groceries, whatever I can do to bring in extra money.

This helps me get Bill A paid off in record time – let’s say I pay an extra $175/month and pay it off in 12 months.  So, then I take the $200 ($25 plus the extra $175) I’ve been paying on Bill A and I apply it to the $40 a month I am paying on Bill B.  This gets Bill B paid off super quick and then I go after Bill C.  Now I’m using the $200 from Bill A along with the $40 from Bill B to make mega-payments on Bill C.  See how powerful this strategy can be?

A debt snowball not only gets the bills paid off in record time, it also saves a lot on interest rates.  Then at the end, you’ve got a nice pile of extra cash available each month to save, invest, or spend on a nice vacation.  It’s such a great feeling.

Disclosure – As an Amazon Associate I earn from qualifying purchases.

Debt Snowball Resource

So, here is how to get the free resource I told you about.  Just sign up for my newsletter and I’ll send you a very helpful spreadsheet that will help you manage your own debts.  It’s not my own spreadsheet – it’s a resource I found, but it’s pretty awesome!  It gives you several different methods you can test out and then tells you exactly how much to pay on each bill every payday.  Very helpful.

Get Your Free Debt Snowball Spreadsheet

Keep in mind that I am an Excel expert.  No foolin’!  I really am very sharp in Excel.  I should be – I’ve been using it pretty much daily for about the last 35 years.  (Which, if you know your spreadsheets, is PRIOR to when Excel was actually invented.  I used several of its predecessors and I’ve even taught classes in it.)  So if I say a spreadsheet is waaay better than anything I could ever come up with, believe me, that is a good spreadsheet!

You just download the spreadsheet.  Then you just enter each of your bills – credit card bills, car loans, anything that is a balance that can be paid off over time.  You don’t need the account numbers, just the total amount due, the monthly payment amount, and interest rate.  That’s often the scary part because you can see exactly how much you owe, all in one place.  But that’s OK, it’s going to get much better very soon.

Debt Snowball Tips

There is another spot in the spreadsheet where you put in your extra income from any side work or extra savings.   That is your snowball amount that gets applied to each bill in turn.  Then you choose one of the 5 different snowball types.  You can see the exact day when each bill will be paid off.  It will also tell you exactly how much in interest you will be paying on it.

Check out my post on why you NEED a side hustle.  Trust me – mine enabled me to retire from Corporate life at the relatively young age of 58.

If you want to try a different method, simply click the calculation type and the numbers all update automatically.  Try them all until you find the method with the fastest pay-off and the lowest interest amount.  Eeeasy-peesy.  On the 2nd tab, you can watch your accounts go down and down every single payday.  It tells you exactly how much to pay on each bill every payday.  Congratulations, you are on your way to snowball heaven!

Here’s another one of my best debt posts where I talk about the evils of minimum payments.  Here’s a hint – they are for SUCKERS.  They are very carefully designed to keep you in debt for as long as possible.  I NEVER ever pay just the minimum due.  I’ll give you my secret tip to pay off debt faster and avoid late fees – ever!  The Trick to Minimum Payments.  

Here’s another tip that may help you AND your children.  I have three children, so after I read Dave Ramsay’s book, I was so impressed, I bought two more copies.  Then I taped a $20 bill to the back of each one and gave them to my kids.  I told them they couldn’t spend the $20 until they had finished the book.  And it worked.  Not only did they read the book, they adopted the behaviors and like 15 years later, none of my kids have any significant issues with debt.  Give it a try.  That $20 plus the cost of the book could save your kids thousands of dollars in the course of their lifetimes.

Dave Ramsey’s The Total Money Makeover

debt snowball

Photo credit:  Fiverr.com/WhitneyLayne

Other posts you may enjoy:

Financial Tips To Help Your Future College Student

Teach Your Teen to be a Smart Shopper

Enjoy a Cruise Without Going Broke or Getting FAT


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15 Comments on Get Out of Debt with a FREE Debt Snowball

  1. Interesting ideas here. Thanks for linking up to Blogger Brags. I’ve pinned your post to the Blogger Brags Pinterest board.

  2. This is so awesome! Maybe this will help us knock out our student loans. I’ll have to talk to my husband about this to see if he would be interested. Love it!

    • Glad to hear it. I’ve seen other tools that weren’t really as good as this one. This spreadsheet is really impressive and I think it would be really easy to use.

    • Thanks! I liked his book so much, I bought three copies of it and taped $20 bills to them and sent them to all my kids to read. They couldn’t have the money until they read it. Totally worth it and I think it’s really helped them.

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