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The debt snowball is a proven method to help you pay off your debts even faster. So many people would rather pay off the debt with the highest interest rate, but paying off your debts smallest to largest REALLY does work with amazing results – and it’s simple!
2. Set up a debt snowball
When I started getting serious about paying off my debt, I had just read Dave Ramsey’s Total Money Makeover and was inspired by the debt snowball.
A debt snowball is where you list all your debts smallest to largest, regardless of the interest rates, and pay the minimum payments on everything but the smallest debt. You throw every extra dollar at the smallest debt you can until it is paid off, then you take what you were paying on it and add it to the payment for the next smallest debt.
I have seen how this method is super effective because it involves your emotions in giving you small wins and making huge traction. Those who follow the debt snowball to attack their debt often get out of debt much sooner because of all the emotional wins.
The Total Money Makeover... the book that changed my life by giving me hope that I could pay off my debt and live a life debt free
3. Set small goals
When money is tight and you are trying to pay off a lot of debt, set small goals for yourself to celebrate along the way.
This will help break down your debt into much more manageable and doable chunks so you can keep your motivation going strong and not get discouraged. For example, you can break down your debt into $1,000 bite sized chunks and focus on paying off just one chunk at a time.
One way track your progress is to color in a picture based on how much you have paid off. It seems so simple, but having a visual representation of your progress will motivate you like nothing else!
I did this and found it to be so inspiring that I created a Money Goals Tracker color pages packet. Get it here.
4. Small rewards
When you reach each small bite-sized goal, whether that’s paying off $500 or $1000 or paying one entire debt off – decide as a family to do something fun as a reward to celebrate.
YES! Absolutely, I want to you to celebrate each milestone as small as it might have to be in your current financial situation. This will help keep you motivated to continue working towards the next small goal and acknowledge that you ARE making progress!
The key is to find a small reward for the small goals. You don’t want to overspend on money you don’t have and undo all the progress you just made by paying off that amount.
One awesome way to celebrate, but still stay on track with your debt payoff is to budget a certain amount of money you can spend on debt pay off milestones freely without guilt. Of course the amount depends on what you have available.
You can also do something fun and different from what you always do as a way to acknowledge your progress.
The next tip will really JUMP START your debt snowball! Click Read More to see what it is...
Like this post? Check out all the rest in :
- Budgeting When Money is Tight Series
- Paying Off Debt Series
Hi! I’m Charissa. I’m on a mission to help hardworking women overcome money struggles and gain financial peace with a Biblical perspective so they can have the freedom to impact their families and communities. Ready to make some changes that will impact your finances in 2020? Click here to get a free worksheet to help you make it happen!
