Money Matters – Step 3: The Debt Snowball

It takes 10 seconds to get into 10 years worth of debt.

The first step to getting out of a hole is to STOP DIGGING DOWN.

Investing and the Five Laws of Holes - Safal Niveshak

Look at your budget and think about what life would be like if you were out of debt. Seems like only a dream to many people, but staying in debt is a nightmare.

Putting a budget in place was the first step to personal financial freedom. Almost everyone has some debt and there are varying methods to getting out of debt. My favorite is the Debt Snowball method. (Wikipedia has a very good description of this method, so I’d recommend you read this article.)

If you are behind on your bills, you need to get them under control. Sort your bills by due date and make sure you send each of them at least the minimum payment due. That will help keep the boogeyman off your shoulders.

Now it’s time to attack your revolving debts (everything except your home mortgage). Your budget should show the names of each debt, what the total amount is for each debt, and the minimum payment. Sort this data by the amount owed. Make minimum payments on everything except the smallest debt. This one you need to pay as much as you can, so that it gets paid off as quick as possible. Every spare dollar you have needs to be applied towards this debt.

Every. Spare. Dollar.

Even the loose change that fell between the seat & console in your car. Fish it out, add it to a jar, and use it to pay this debt off.

Be creative and find ways to increase your income while decreasing your expenses. Get another job, even if it’s only temporary. Cut back on simple things, like eating out. Cancel memberships for things that you are not using, like the gym.

Concentrate every effort on paying off that first debt. Once it’s gone, pat yourself on the back, then adjust your focus on the next debt in line.

Take the money you had been paying on the first debt and add that to the next debt’s minimum payment. Keep adding in any other spare money that you have. This is how you make the snowball bigger. Keep piling on as much as possible and as often as possible; paying everything you can, until that debt is paid off.

Repeat this process for every debt in line, until they are all paid off.

It’s not comfortable, but once you see the snowball start to roll, you will be comforted knowing that your debts are going away. And it will take some time, so don’t get discouraged after the first month.

Here are copies of the debt snowballs from the example budget sheet that I included in a previous post:

As you can clearly see, the snowball picks up mass and the debts get paid off faster than if you had continued to make just regular payments. This is just the first year’s worth of snowball.

It can also be visualized in a graph like this:

The last debt is a student loan that had not even been touched during this time. (Let’s be honest, MANY people have student loans that they ignore.) After the car payment is gone (2nd year month 2), we tackle the student loan and it gets paid off in approximately 11 months.

Approximately 3 years and you are done. OUT of debt. Finished with this step.

Now let’s keep the momentum going forward – Step 4: Fill Up Your Emergency Fund.


It’s one thing to say “Your debt snowball will pick up speed” and it’s real simple to show a mathematical example, like the one I included in the article above. It’s another thing to show ACTUAL numbers. So here you go…. my ACTUAL debt snowballs from 2021:

January started off with a total debt of $21,543.19 and December rounded out with a total debt of $9,035.92. That’s a difference of $12,507.27. That’s only $1,000 per month (average), which might not sound like much, but on a limited income and living in California (high cost of living), this is HUGE progress. And this shows that the debt snowball method DOES ACTUALLY WORK. And it didn’t take a huge infusion of cash, it just took re-prioritizing WHERE you put your money.

So how does 2022 look so far? I’d say it’s looking pretty bright (financially) !!


About hemibill

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3 Responses to Money Matters – Step 3: The Debt Snowball

  1. Pingback: Money Matters – Step 2: Start an Emergency Fund | Hemibill's Blog

  2. Pingback: Money Matters – Delusions of Grandeur? | Hemibill's Blog

  3. Pingback: Money Walks, Bullshit Talks | Hemibill's Blog

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