The Debt Snowball

If you have read any of my previous posts, you already know that I am a huge fan of Dave Ramsey, whose teachings helped me eradicate my debt. Fast. 

A common misconception about paying off debt is that you have to attack the largest balance and/or interest rate first, but depending on the balance, that could take quite a while, especially if you are making payments on several other debts as well. What you want to do instead is attack the smallest balance first by applying every extra dollar that you can squeeze from your budget while making only the minimum payments on all of your other debts. Because it is a smaller balance and you are attacking it aggressively, it will get paid off much faster than a larger balance would. Then you can attack the next smallest balance. Everything that was applied to the previous balance can now be applied to the next one as well as every extra dollar that you can squeeze from your budget. Repeat this cycle until your debt disappears! Mr. Ramsey calls this cycle the Debt Snowball Effect. 

I started out making only the minimum monthly payments of $466 on my student loans. For a couple of years, I had three different jobs at the same time, and I shared a cheap one bedroom apartment with a friend to keep my living expenses very low. I kept finding ways to make more sacrifices and spend less. It actually became a fun game of finding new ways to cut back. I also changed jobs and made more money over time. It is important to note that I was also tithing the entire time that I was paying off debt. I point this out only because I truly believe that being faithful to God with my finances played just as major a role in helping me erase my debt. All of these factors combined enabled me to work my way up to making monthly payments of $1000-$1200. 

After making sacrifices, learning about budgeting, stewardship (see my previous posts), and the Debt Snowball Effect, I was on debt-blasting cruise control! Before I applied these things, I was at the foot of Debt Mountain, a 55,000 foot ($) beast staring me right in the face. But I finally had the information and maturity that I needed for the journey, and I was fiercely determined to reach my new goal of becoming debt free. The process took five years, and on August 31, 2016, at the young age of 30, I reached my goal!