How the Debt Snowball Method Works

debt ball and chain

If you’ve ever been in much debt, you can understand the pressure that it places on you. It’s a heavy burden to owe people money, and it can cause all sorts of feelings—from anxiety to fear to sadness to anger to hopelessness. This is why God warns us in His Word about excessive debt (Proverbs 22:7). Did you know that there are hundreds, if not thousands of verses in the Bible dealing with money and possessions? And a full 2/3 of Jesus’ parables use monetary references to make His points.

When Trevor and I were on our honeymoon, we took stock of our finances and realized that we were in trouble. Yes, I know that wasn’t the most romantic topic of conversation, but we had plenty of time to talk, and the busyness of wedding planning was over. Reality set in as we started adding up our obligations.

I was making less than $20,000 a year at my full-time job, and Trevor was making about twice that as a public school teacher, so we weren’t exactly raking in the dough. The tally of our six debts came to around $25,000, and we had absolutely no assets to draw from. I was overwhelmed at the heaviness of that realization, and I wanted to dig out of debt as quickly as possible.

We cut our honeymoon short and came home to our small apartment to start working on a budget and a plan for getting out of debt. We set up our budget based only on Trevor’s salary, and we used all of my income (after the tithe to our church) to pay toward debts. We wrote out a list of our debts, with their payment amounts, interest rates, total balance, and so forth.

Using the “snowball method,” we started paying extra on our smallest debt—Trevor’s student loan. We paid it off quickly and used what we were paying on that to pay extra on the next smallest debt, my engagement ring. Gulp. Yes, Trevor had financed my engagement ring with a high interest finance company. Oops! When we paid off the engagement ring, we rolled all of our extra money into paying off his credit card.

The next debt to go was Trevor’s car loan. Then we paid off a piece of land that he had financed. Last of all was my car loan. So, within 13 months of our wedding, we had “snowballed” all of our debts away. Whew! It was a wonderful feeling, and we were thankful for the Lord’s guidance and provision.

If you are struggling with debts, let me give you some ideas that might help as you chip away at them.

1. Establish a good, workable budget if you don’t have one already. You can find free budgeting resources here and here, and here.

2. Use this debt list to make a list of all of your debts. If all of the interest rates are similar, focus on paying off the one with the smallest balance first. (If one of your debts has a much higher interest rate than the others, I suggest paying off that one first, because you will save more money in the long run.)

3. Pay the required minimum payments on all of your debts. In the meantime, free up any extra money that you can in your budget and start paying extra toward the debt with the smallest balance. You might even consider taking on an extra part-time job temporarily in order to sock away at your debts. Just be sure not to become accustomed to that extra income so that you can give up the additional job when your debts are eliminated.

4. When the smallest debt is gone, have a little (inexpensive) party, and then use everything you were paying on debt #1 to pay toward the next smallest debt (plus the minimum payment for debt #2).

5. When debt #2 is gone, have another celebration and then work on debt #3. Continue in this fashion until all of your debts are paid off, all the way up to your mortgage.

Use these calculators to compute how quickly you can retire your mortgage by paying extra principal payment amounts. I think you will be amazed at how fast you can be completely debt free and how much money you will save by snowballing your debts. It might be necessary to cut back on your spending in the short term, but you won’t regret the temporary belt-tightening once you are free of the burden of debt. I promise!

“It is for freedom that Christ has set us free. Stand firm, then, and do not let yourselves be burdened again by a yoke of slavery.” (Galatians 5:1)

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