Roll Away Financial Stress with the Debt Snowball Method

What are the factors that cause you the most stress in your everyday life and relationships?  I am guessing that, if you are being honest with yourself, most of you would say that money is toward the top of your list!  I know for me as an individual and for my husband and me as a couple, money has always been one of the most stressful things that we have to deal with as adults.  

Like most people, we have a lot of debt built up from student loans, credit cards, auto loans, etc., which means that we have struggled with living paycheck to paycheck.  Each payday, I would sit down and pay our monthly bills, and it always ended with feelings of frustration and helplessness because the money seemed to disappear just as fast as we earned it!  I started talking to friends and researching the best methods for paying off debt, and I came across Dave Ramsey's Debt Snowball Method.  After looking some information up online, we put this plan into action, and the results so far have been amazing!  I wanted to share how this method works in case anyone is not familiar with it.

Step 1:

The first step that is recommended is to build a $1000 emergency fund.  This will let you have a cushion for emergencies, such as auto or home repairs, unexpected illness or injuries, etc.  

Step 2:

After you build your emergency fund to $1000, you will need to organize all of your debt (except your mortgage) from the smallest to largest dollar amount owed.  In this case, interest rates do not matter.  This part was hard for me because I had always tried to pay the largest interest rates off first.  However, if you start with your smallest dollar amount, regardless of interest rates, you will see results quicker and therefore stay motivated to keep the snowball rolling!

Step 3:

Your next step is to start putting all of your extra money each month toward the smallest loan while you pay only the minimum payment toward all of your other debts.  You will keep repeating this each month until the smallest debt is paid off.

Step 4:

After your smallest debt is paid off, you will take the amount you were applying each month to that loan and apply that amount plus the minimum payment to the next largest debt on your list.  Keep paying minimum payments on all of the other debts.  

Step 5:

Repeat steps 2-4 until all of your debt besides your mortgage is paid in full!!

Since starting this method less than 2 years ago, my husband and I have paid off ten of our monthly loans, and it is such an awesome feeling!!  Once your snowball amount begins to build, you gain a lot of momentum and the results happen quicker and quicker each time you pay off the next loan.  We are beginning to see light at the end of what was a very long tunnel not too long ago, and it is such a huge relief!  Our dream is to be completely debt-free and to be able to pay cash for anything we need from then on.  Then, we will be able to enjoy freedoms like traveling and saving for our and our daughters' futures!