How We Used the Debt Snowball Method to Pay Off Our Debt

So what is the debt snowball method? The point is to pay off all your debt, starting from the smallest. If you do not know exactly how much you owe yet, start by pulling your credit report, digging up all the bills, and listing all your debts from smallest to largest.

Do not worry about categories, look at each individual debt. Your credit card loans for $500 and for $5000 belong in different places in the debt snowball. The more that you can separate everything into little tiny manageable chunks, the better and easier it will be to start attacking.

That way, you will start with the smallest debt, get that paid off really quickly and then move to the next one, which keeps you motivated.

When you start tackling a very large debt snowball, make sure to set even smaller goals for the bigger amounts that just cannot be broken down.

For my largest student loan chunk which is $56,000, I am probably going to set smaller little goals: for example, celebrate the $2,500 that we hit. That way, it feels much less overwhelming.

Now that you have broken everything down, you need money to pay for these things. The next step is to learn how to budget and cut your expenses like crazy. That is so important because that is how you tell your money where to go.

In the first three years we were practicing, we were still using credit cards and not making a budget, which was a mess. You cannot really start your debt snowball until you know how to budget and you cut down your expenses so you are not going back into debt.

Once you have done that and you have extra money, you are going to pay all your minimum payments on all of your debt, and then any extra money you can find from selling things or extra jobs is going to go to the smallest debt until that is paid off.

Once the smallest one is paid, that minimum payment you were paying plus any extra you can find now goes to the next one. And as you pay little debts off, chunk and chunk and chunk until you get to the highest debt.

At that point, you are going to be throwing so much money at that highest debt that it is going to actually go away pretty fast.

However, there are some snowball exceptions. Those are the “scary” debts, which you want to pay off first. For example, as new business owners, we have some IRS debt that we owe, and the IRS can literally ruin your life if they want to.

Therefore, even though that is not our smallest debt, we are working very hard to chunk any and all extra money into that debt and we should have it paid off in a couple of months. Once we are done with that, we will start with those little hospital bills and then we will roll right into the student loans and business debts that we have.

So if you have any IRS debt or any kind of debt where they sued you and they are now garnishing your wages, you want to get that cleared up first.

I did not separate our business debt and our personal debt. I have a goal for ourselves and our business is 100% debt-free, so everything is rolled into one big snowball.

Finally, do not worry about the interest rates. If you are a math person or a finance person, that probably bothers you. However, the point of the debt snowball is you are going to get this paid off fast. You are not going to be paying your student loans for 25 years hoping for student loan forgiveness.

The debt snowball works and is so motivating because it makes you believe that you can do it. You believe in yourself. Once you learn how to budget and start cutting your expenses, you have hope. That is why it really works.

If you have been wondering how you are going to pay off debt, and how you can tackle such a large amount of debt, I definitely recommend trying the debt snowball.

Debt snowball method

Have you heard of the debt snowball method before? How are you tackling your own debt? Feel free to share your advice and your questions in the comments!