Debt Payoff, Saving Money

How to Make a Debt Snowball

How to make a debt snowball- Making Mommy Money

We are now officially in baby step two of Dave Ramsey’s baby steps to financial freedom, the debt snowball. This is by far the hardest, and probably longest step of the baby steps. We have a total of $40,000 to pay off before we are debt free from everything but our house. That’s a whole other step, so let’s not jump ahead.

Baby Step Two

Once you have your emergency fund finished, you need to start on your debt snowball. Basically, the concept of the debt snowball is to list your debt totals from smallest to largest. Don’t worry about interest rates for this because paying the smallest total first gives you more motivation.

Why does it give you more motivation? Because instead of one big victory that takes a long time, you have the chance to have a lot of small victories in a shorter time frame. Trust me, when you’re paying off $40,000 in debt you need every victory you can get.

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Once you make that list, you then start paying as much as you can on the smallest total. That means you pay the minimum payment on every other debt but the one you’re paying off. And then you attack the one your paying off.

When the smallest one in paid off, take the total monthly payment you made on that one and add it to the minimum payment on the second smallest. Continue to make minimum payments on the others. Attack that total with a vengeance to make your debt snowball get bigger and bigger.

What does our debt snowball look like?

This is our list of smallest to largest debt as of July 2017:

Credit card: 380.47
old hospital bill: 2,796.64, minimum payment $100
Ford Edge: 11, 137.87, minimum payment $273
Student loan: 23,777, minimum payment $300

How to make a debt snowball- Making Mommy Money


We’re actually going to pay off our credit card this month! We never plan on using a credit card again, we’re going to stick to the cash envelope system. So that means that starting in August, our hospital bill payment is going to go from $100 a month to $480. The car and student loan will stay at their minimum payments then.


Grow that debt snowball

When that bill ¬†monthly payment goes to $480, it’ll be paid off by at least January 2018. That means that in February 2018, the car payment will go from $273 to $753 a month.

Just with that payment change, the car will be paid off in February 2019. But that will probably be sooner because Robert and I usually put at least half of our tax refunds (about $1000) towards our financial goals every year. We don’t like to spend money that was supposed to be ours in the first place. If we did just that one time extra payment, we would have it paid off in December of 2018.

If we were able to pay off the car in December 2018, we would then start the year of 2019 with only the student loan debt in our debt snowball, which would by then have a total of 18,377. The new monthly payment in January 2019 for the student loan will be $1053. Yes people, that’s a monthly payment. Look how big the debt snowball is supposed to get!!

How to make a debt snowball- Making Mommy Money

The final snowball

So with it being that much, we’re expected to be completely debt free in May 2020. Now I know, that is past the two-year mark that is our goal for being debt free. So stay tuned to see if we can beat that and pay off our debt faster!

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