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You are here: Home / Finances / Why I Recommend the Debt Snowball

by Barry  15 Comments

Why I Recommend the Debt Snowball

If you’ve been around here long, you know I want you out of debt.  I don’t want you to reduce your debt – I want it gone by simply checking out this Same day loans for bad credit site. And we’re not talking about “eventually,” but ASAP.  You also probably know I’m a huge Dave Ramsey fan.  The man is a no-nonsense debt assassin.  He keeps it simple and to the point so you can get started immediately on what he says to do.  While I disagree with him on a few minor points, one where I am in lockstep with him is his advice to use the debt snowball.  Today I’ll talk about why that’s the best and fastest way to get out of debt.

What is the Debt Snowball

Simply put, you organize all your debts including mortgage and personal loans, from smallest to largest, based on the total balance of each debt.  Ignoring interest rates and almost everything else about the debts, you pay minimums on all bills except the smallest one.  On the smallest debt, you put every extra penny you can scrape together to KILL it.  Dave explains it a little differently in an article on his website, but I think you get the idea.

Why the Debt Snowball

Getting out of debt starts with having the right mindset about debt.  If you’re one of these people who believe the argument that, “you’ll always have debt,” or, “a little debt is okay – you can manage it,” you’re not ready for this discussion.  However, if you’re sick and tired of going to work every day just to pay bills you wish would just go away, you’re in the right place to fix this mess.

bad guysImagine something with me: There are a bunch of bad guys coming at you in a dark alley and you can’t run away.  Which one do you take out first?  I’d just about bet you will focus on getting rid of the easiest target first.  Your debts are those “bad guys.”  With each bad guy that falls, you have less to worry about and the odds of surviving this fight tip more and more in your favor.  Eventually, it is just you and one or two big, scary dudes.  But hey, by that time you’ve beat a bunch of little guys, so you’ve gained confidence that you can do this!

What About Math?

Again stealing from Dave, if you were making your choices about debt based on math, you probably wouldn’t have gotten into debt in the first place.  I understand there are probably many of you that know much more about the intricacies of math than I ever will, but can’t seem to pay off your student loans or credit cards.  So instead of arguing the math, let’s focus on the root problem – behavior.  No matter what got you into the debt (poor choices or bad circumstances), fixing this issue boils down to very simple math + very focused behavior.

Even though it doesn’t make mathematical sense, the debt snowball is the best method of paying off debt.  Why? Thinking back to our “bad guys in a dark alley” example, the little guys will fall a lot faster than the big guys.  And once they’re down, you never have to deal with them again.  Looking at 20 bills and seeing each month that they all were a little smaller is all well and good, but how about looking at 20 bills this month, 19 next month, 17 the month after that, and 14 the month thereafter?  That looks a lot better to me than only seeing balances shrink.

With all the complexities life has to offer, let’s keep paying off debt as simple as possible.  Let’s remember our goal is to get OUT of debt, not to reduce it.  The debt snowball is so simple, and yet it works.

Have you used the Debt Snowball?

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About Barry

Barry is the husband half of the Humorous Homemaking team. He speaks and writes mostly about personal development and personal finance issues. He is the author of From Debtor to Better: The Details of Debt and How to Get Out! and regularly speaks at conferences and other events.

Disclosure of Material Connection: Some of the links in the content above are “affiliate links.” This means if you click on the link and purchase an item, I may receive an affiliate commission. Regardless, I only recommend products or services I use personally and believe will add value to my readers. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”

Comment Policy: I love reading your thoughts and input on what you read here. I'm sure we'll disagree sometimes and that's okay! In those cases, do what's right for you and yours. As with any form of communication, only post comments that move the discussion in a positive direction.

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Comments

  1. Heather says

    March 25, 2014 at 11:40 am

    We just used half of our tax return to pay off one of our cars and also traded in a newer van for an older van (with less miles!!) for half the loan amount so we can pay it off twice as fast! We are on our way!

    Reply
  2. Jamie says

    March 6, 2014 at 4:48 pm

    Agree wholeheartedly. I teach my children about this often. Can’t wait to have our house paid for by the time our kids start college. Nice to meet you, Barry! 🙂

    Reply
  3. gladys says

    March 3, 2014 at 9:40 pm

    Hi Stacy, I found your blog through Angela’s Grocery Shrink. I read about Dave Ramsey when I was reading finance article on Yahoo! and a reader commented about him, so I searched his name on google and read something about him and visited his website and know about “debt snowball”, at first, I was hesitant because a lot of finance guru say it’s not advisable for your credit score’s sake, but he makes sense, if you knock out the small ones, you’re ready for the big ones. And we’re doing this because we don’t want debts anymore!

    Reply
    • myersbr2 says

      March 4, 2014 at 9:16 am

      As Dave would say, “Debt is Normal…Be Weird!”

      Reply
  4. Wendy Briscoe says

    March 1, 2014 at 7:10 pm

    We just used our tax return to buy an oven (which was badly needed as my oven went ka put, and they no longer made the part for it.) NO PAYMENTS! I had car trouble, and husband went and got the car part and put it in by himself (saving us money). Then, I have my medical bills down to $500 from almost $3,000 six years ago. 🙂 We’re getting there. Whoo hoo!

    I’ve started chores with my son, and once a month if he’s good with his chores, we go out for a treat (Sonic runs or some other neat place.) This has completely stopped our running through drive thrus. Money saved! We use these trips once a month now, rather than several times a week. 🙂 I’m learning something Stacy. Your hard work is teaching us a whole lot! Thank you!

    Reply
    • Stacy says

      March 2, 2014 at 1:33 pm

      Keep it up, Wendy! Sounds like you’re doing great!

      Reply
  5. Sandy says

    March 1, 2014 at 2:23 pm

    We are actually starting this month!! Thank you for this post. I needed the encouragement. I am curious though on the minor points that you disagree on with Dave’s plan. If you don’t mind sharing that.

    Reply
    • myersbr2 says

      March 2, 2014 at 1:36 pm

      The biggest thing for those just starting on their journey where Dave and I differ is the amount of mini-emergency fund someone should start with. He says $1,000. I counsel way too many people who make very little or a whole lot and that number is sometimes not a good way to look at it. I recommend the amount of one paycheck. Why? Two reasons: 1) this ties your mini emergency fund to your income and expenses level better than a static number and 2) it helps break the all-too-common cycle of living paycheck to paycheck. If you want more details on where we differ, you should check out my book: http://www.debtortobetter.com/the-book/

      Reply
      • anon says

        March 3, 2014 at 5:00 pm

        one weekly paycheck? one paycheck that comes every 2 weeks? One monthly paycheck? I only ask cause people get paid differently, so unsure what you are counting as one paycheck.

        Reply
        • myersbr2 says

          March 4, 2014 at 9:29 am

          Good question. I say one paycheck, no matter how often you get paid. In a perfect world, I’d say at least two weeks’ worth of pay in savings is a minimum start, but a single paycheck, no matter how frequently your paid is fine because the primary goal is to break the cycle of being dependent on the very next check. It is less about the amount and more about making sure you have money tucked away in case something goes wrong so you won’t be desperate for the next payday.

          Reply
    • Stacy says

      March 2, 2014 at 1:32 pm

      I’ll let Barry chime in on this one.

      Reply
  6. Helen Thomas says

    March 1, 2014 at 11:52 am

    Another bonus is that as you get further ahead on your debt the minimum monthly payment goes down so you are putting more towards the principal each month. Depending on your servicer too, the due date is extended for your payment. I like that because if I DID run into trouble like job loss and loss of emergency fund, the loan wouldn’t get me in trouble. Yes interest would continue to build up but I wouldn’t be charged with a late payment.

    This is why I periodically review my actual billing statements to see if I can build up the snowball faster. We also use my husband’s year-end bonus for paying down debt.

    Reply
    • Stacy says

      March 2, 2014 at 1:27 pm

      Excellent points! That is something not a lot of folks are aware of is that due dates aren’t always the same. I know Citigroup went to a system using the “business day of the month” instead of a regular day each month. It threw a bunch of customers off but can be used to your benefit if you pay attention! Thanks for adding this idea.

      Reply
      • Helen Thomas says

        March 2, 2014 at 1:40 pm

        It also can move months ahead. I managed to pay a lot of my school loan ‘ahead’ before I was married and had a car and all that, so my next payment isn’t technically due til some time in 2016!

        Reply
  7. Tara H says

    March 1, 2014 at 10:16 am

    We finally started our debt snowball in February!! After paying off our van we actually have the money to snowball! We’re so excited! Pray for us please as (obviously) we’ve never been good at this!
    I stay at home and homeschool our five boys so it’s hard for me to find a way to make extra money. But I have a friend who needs to get a job for a few months so I might be babysitting for her…which means snowballing faster!! Yeah! 🙂

    Reply


Hello! I’m Stacy!

I believe God created you to be the hero of your home. You CAN manage your home instead of it managing you. That’s why I empower women with simple solutions for their homemaking needs – because if it’s not easy, you won’t do it. {Read More…}

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