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Eliminate Debt Using the Debt Snowball Method
Debt is a serious burden that many people struggle with daily. It’s more widespread than you might think. According to a recent Gallup poll, 38% of Americans are afraid they can’t make their minimum payment on their credit card bills.
So if you have debt, you’re not alone. In fact, you’re in the majority. But wouldn’t you like to break free from this very non-exclusive club? Here’s how you can eliminate debt using the debt snowball method.
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Review Your Budget
Take a long, hard look at your household budget (assuming you have one), and identify any areas where you can cut back. How much should you cut?
Well, financial expert Dave Ramsey has a saying that applies perfectly here: “Beans and rice, rice and beans.” The idea is to drastically cut expenses so that you can devote as much money as possible to paying off debt.
Here’s a useful rule of thumb when reviewing your budget: if it’s not essential for survival, it’s a luxury, and you should consider eliminating it—at least for now.
That vacation you were planning? Put that money toward your debt instead. Once you’ve paid off your obligations, you’ll be able to save faster than ever and enjoy a debt-free vacation without stress.
Dining out? Redirect that money toward your debts.
Movie nights? Entertainment subscriptions? These things can wait.
Your new source of entertainment will be grocery shopping, where you’ll be stretching every dollar. It won’t be easy, but trust me, the payoff is worth it.
Make a List of Your Debts
The first step in the debt snowball method is to list all your debts. This budget planner is great for keeping track of all things financial. Every single one, no matter how small—including that $20 you borrowed from your cousin back in high school.
The only debt you don’t need to include right now is your mortgage—you’ll tackle that later.
Build Your Debt Snowball
Now that you have your list, arrange your debts from the smallest to the largest balance. Focus all of your energy on paying off the smallest one first while making minimum payments on the others.
Once you’ve eliminated that first debt, take the money you were putting toward it and apply it to the next smallest debt on your list. This process creates a snowball effect—your payments grow as you roll the freed-up money into the next debt.
Many financial experts refer to this strategy as the “debt snowball method,” and it works.
If your smallest debt isn’t already in your budget, add it in and prioritize it. The goal is to be completely debt-free as quickly as possible.
As you pay off each debt, take a moment to celebrate! You don’t have to splurge—just acknowledge the victory. You could ceremoniously shred your old budget, cross off the debt from your list, or even throw darts at a picture of your past financial burdens.
Whatever you do, recognize the progress you’ve made and use it as motivation to keep going.
Look for Snowball Boosters
Want to speed things up? Look for ways to bring in extra money and apply it directly to your current target debt. There are plenty of ways to do this:
- Take on a side hustle, such as delivering food or freelancing.
- Hold a yard sale and sell items you no longer need.
- Sell a hobby item you don’t use.
- Cut unnecessary expenses even further.
Every extra dollar you can throw at your debt speeds up the process. The faster you eliminate debt, the quicker you can start building real wealth.
Stay Motivated and Keep Pushing Forward
Getting out of debt isn’t just about numbers—it’s about mindset. You need to stay committed and focused, even when it feels tough. Keep reminding yourself why you started this journey in the first place.
Maybe you want financial freedom, less stress, or the ability to invest in your future. Whatever your reason, keep it at the forefront of your mind.
What Happens After the Debt Snowball?
Once you’ve successfully eliminated your debt using the debt snowball method, your next step is to build wealth. Take the money you were using to pay off debts and start investing in your future.
Whether it’s saving for retirement, building an emergency fund, or investing in a home, you now have the financial freedom to make smart choices without debt weighing you down.
With the debt snowball method, you’ll not only eliminate debt, but you’ll also gain control of your financial future. That’s a snowball worth keeping in your corner!
Looking for other ways to budget and save? Check out these 5 easy tips to get your family involved with the family budget.