Friday, July 12, 2013

The Debt Snowball

I've been attempting to pay off the debt for a few years now... what a crazy journey. I've sort of been following the debt snowball principle; I've been putting extra bits of money towards the smallest debt. But I have not ever really snowballed my debt. Seriously this debt payoff thing is such a roller coaster ride.

For anyone who is unaware of the debt snowball here is how it works:
Line the debts up smallest to largest.
I'm calling mine 1 through 7.
Pay the minimum payments on each debt except for the smallest.
You pay every extra penny towards the smallest.
After you've paid off the smallest debt you put that minimum payment and every extra penny towards the next in line.

Here's how my debt snowball for July looks. Keep in mind I cannot truly begin the snowball until I have $1000 in the emergency fund again. I have all our debts in this list except for the Mortgage.

1: $15 payment towards the smallest debt
2: $56
3: $37
4: $85
5: $230
6: $158
7: $153 payment towards the largest debt

Once debt #1 is payed off the monthly minimum payment for debt #2 will not be $56, it will be $71. Once we've payed off debts #1 through #6, then the monthly minimum payment for #7 will not be $153, it will be $734. We're talking years here but you get the idea.

IF, big stinking "IF" my hours at work are sufficient and if I can stick to my tightly drawn up budget and if no crazy Murphy incidents occur I should have the $1000 emergency fund up and running by October, debt #1 payed off in November, and the snowball moving along in December. It'd be faster if I didn't have dentist and doctor bills to pay off this month and next. Anyhow...

In the meantime itty bitty baby snowball is patiently sitting atop the hill eagerly anticipating momentum and growth while hoping desperately not to melt into a puddle of failure.


  1. Thats such a great idea! I'm definitely going to apply that to my debts. Its not like you're forking out extra every month to pay them, its always the same amount going out. Thanks!

  2. The Debt Snowball is a great idea, it really does work.

    Would it be better to forget about the emergency fund and just put all your money to paying off the debts? The emergency fund just wastes your time, while the interest piles up.

    You could always get credit if there was a real emergency.


    1. I spent a good long time avoiding the emergency fund because just like you said it seems like a waste of time while you're paying interest but truthfully it's so much better to have that money set aside in the bank then to count on a credit card to pay for an emergency. I don't want to use credit. The emergency fund is essential.

  3. It seems like there is an issue with you not getting enough hours at work. Have you talked to you manager? Or is it time to start looking for a different job?

    I think the debt snowball idea is great.

    1. My job is contracted so sometimes work just doesn't come in. I can only do the jobs we have. We have crazy busy times and crazy slow times. I'm not excited about the pay cut (with hours being a lot slower lately) but I am taking advantage of the time home with my son. The extra time with him during this lull is more valuable to me than the income.

  4. Sounds like a good plan!

  5. We use the debt snowball and it does work well. I paid off one credit card, my small doctor bills, and my car payment. I am slowly paying off my husband's credit card (542 a month, now since the previous small bills are paid), and it does gain momentum. When the credit card is paid, then we will work on my student loan, our line of equity, and then the works!!