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I find myself increasingly scrolling through my Facebook feed, looking at friends who post about how they want to be debt free or are in the process of getting there. I see those of you who are struggling with your money situations in the open, and I see friends who keep it close. I see those of you who are hanging on, and those of you who are winning. I want ALL of you to win. When YOU have control over your money, YOU shape your future. YOU have peace.
If we hadn’t made a conscious choice to change our money habits, we would still be broke, in debt, and waiting for the other shoe to drop and ruin us. We paid off $24,000 in one year on a teacher salary and freelance money by following the Dave Ramsey DEBT SNOWBALL.
It works like this:
- List all debts in order from smallest to largest balance (yes, there are pros and cons of going by interest rate, etc. but the biggest plus to going smallest to largest balance is the psychology of getting a victory quickly).
- List each debt’s minimum payment. You will keep paying the minimums on the remaining debts while you work on the first one.
- Starting with the first debt, pay the minimum payment plus anything extra you can afford to throw at it. KNOCK IT OUT.
- Take what you were paying on the first debt and ADD it to the payment of the second one.
- Take the combined payment from the second debt and add it to the third.
- Rinse and repeat.
- High five! You’re out of debt!
How long this takes it highly dependent on your debt level, your household income, and your willingness to do whatever it takes to kill your debt for good. Dave calls this having “gazelle-like intensity”. Your debt is an angry lion and it wants to eat you. You have to RUN RUN AND FIGHT LIKE HELL TO GET AWAY. And once you’ve escaped, you don’t really want to go back and get eaten either.
When we paid off our debts, we kept a little hand-written chart on the fridge showing our progress. Any time we nixed one, we’d cross it out together and high-five (annnnnd maybe knock back a shot of bourbon for good measure). I liked the physical copy better than doing it in Excel because I liked the freedom to write with my own hand, make notes the way I wanted to, etc. If you want to keep a hand-written chart on YOUR fridge for future high-fives, take a copy of our PDF below!
Easy Debt Snowball Worksheet – Example Included!
And if you prefer to let the computer do the hard stuff for you, the folks over at Vertex42 have an AWESOME FREE TEMPLATE for Microsoft Excel, Google Sheets, and Open Office that you can use!
If you have deeper financial worries than a simple worksheet can solve, I highly recommend you seek out a qualified financial advisor you can trust. You may find a local Financial Peace University host in your area, or you might try contacting one of Dave’s Endorsed Local Providers if possible.
Whatever you do, don’t give up! Your debt doesn’t have to own you. You may not feel like you have control over your money, but you have control of YOU, and YOU can tell your money who’s boss. Good luck to you!
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Kim M Richmond says
My Partner and breadwinner of this family became very ill with a type of staph infection after a tonsillectomy, which lasted for about a year. Income became half and outgo increased immensely due to the constant medical bills flooding in. We have incurred about thirty thousand dollars debt. between medical bills and living on credit cards. I feel overwhelmed and stress about the situation. we are able to pay all the monthly bills but there is nothing left for food or gas. I end up paying the credit card bills and then turning around and using them again to buy gas and food. Just spinning our wheels and getting further into debt by the month. We do have about three thousand dollars coming back for our income tax return. I want to pay it toward our debt but because we have been going without for the last year. We are in dire need of tires for the car and Eyeglasses that are not covered by insurance. We need close and food. My partner thinks we should put it all toward the bills. I think we need to pay cash for the thing we can’t afford to buy and will end up having to put them on credit anyway. What are your thoughts?
Wow, I definitely feel for you in this situation. I’ve seen within my own family just how debilitating medical issues and the debt that comes with it can be. My first piece of advice would be to take care of your pillars FIRST and not the debt. Housing, food, utilities, and transportation. AFTER that you can worry about the debts, but not first. Look at other ways to potentially increase income. Perhaps that includes some kind of work at home job (there are lots of great, legitimate options out there. I used to do search engine evaluation and earned a few extra hundred dollars a month working in my spare time). That may also include looking at any benefits, state or federal, that you all might be eligible for due to disability or illness. For the tax refund coming to you, I would get the tires and eyeglasses before paying on the debt since those things will allow you to more easily go make money (hard to go do a job if you can’t get there or see). Eyeglasses can be had less expensively that getting them at the eye doctor. If you ask, they’ll just give you your prescription and you can put your numbers in on a site like zennioptical.com I also like to just get new lenses made for my old frames at Walmart if I can. I’ve been using the same frames for the past 15 years and typically only pay about $40 for new lenses when I need them, so you might look into that if it’s an option. After that, something you can do is contact your creditors directly. Write them a letter stating that your income has been drastically reduced and that you can only afford to pay them $X. Sometimes you might include a budget sheet and show how they fit in to your budget and that you ARE thinking about them with the intent to repay. This is something a family member of mine did month after month until they could get current and increase their income. If you’d like, I can talk to you in more detail via email. I’ll send this to you as well just in case my reply doesn’t get sent as an automatic notification to you. Best of luck to you in a tough situation!!