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The Debt Snowball



Messenger Staff

I think everyone loves payday but it’s honestly a day that I have a love/hate relationship with. When the day comes, I look forward to receiving the check because it’s a tangible reward that I have earned through my efforts at work. The moment is filled with excitement no matter how many times it happens. It’s also a welcome relief to my personal finances! I even love the act of depositing my check at the bank just to see the monetary value in my account rise.

However as good as payday can feel, that moment of satisfaction is often short lived. As soon as the money hits my account, it seems like my bills and debt payments are immediately due. Before I know it, the money is gone and I’m looking forward to the next paycheck.The vicious cycle repeats itself every scheduled 2 weeks.

While the money goes more quickly than I would like, my current financial situation is not nearly as bad as it was a few years ago.. At the time, I was living tightly from paycheck to paycheck and was in massive debt. I couldn’t afford anything, and buying groceries was a struggle for me. On top of that, I got into a bad habit of using credit cards to afford things I couldn’t afford. It was crippling. I got myself so far into a hole that I didn’t know how to get myself out of.

When I was about to lose hope, I heard about a man named Dave Ramsey who is known for being a financial guru. Dave has written a few books on how to get out of debt and has helped a lot of people with his knowledge on the subject. Desperate for help, I decided to look him up on the internet and read one of his books for advice.

That is when I came across Dave Ramsey’s strategy called “The Debt Snowball”. This method is a debt reduction strategy in which you pay off bills in order of smallest to largest, regardless of interest rate. This strategy can help you avoid going into debt in the future and helps you pay off debts one at a time at a much quicker pace.

The first step of the snowball effect is to create an emergency fund for yourself of $1000.00. An emergency fund covers life events you can’t plan for such as flat tires, a visit to the doctor for illness, or unexpected vet bills. An emergency fund also protects you from having to go further into debt to pay for an unexpected expense.

Once you have money put to the side, the second step is to list your debts from smallest to largest. Make minimum payments on all debts except the smallest. Throw as much money as you can at the smallest debt. Once that debt is gone, take its payment and apply it to the next smallest debt while continuing to make minimum payments on the rest. Dave recommends repeating this method as you plow your way through debt. “The more you pay off, the more your freed-up money grows, like a snowball rolling downhill.”

I have used Dave Ramsey’s method for five years now. While I am not currently debt free, I have gotten rid of the majority of my debt using this strategy. I had eight substantial debts to pay off at the beginning of my snowball journey and now I only have two debts to pay off before I am completely debt free. Money is still tight for me from time to time but at least I am chipping away at a goal that will free me from living my life in financial burden. They say that 80 percent of the population is in some sort of debt. Thanks to Dave Ramsey’s advice, in a couple of years I’ll be in the 20 percent who is not.