Snowballing Debt: How We Paid off $16,000 in 9 months

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Debt, it’s a household term thrown around so lightly these days.

Debt is normal. Be weird.

Unfortunately, with a little poking and prodding by big banks, credit card companies, payday loans, and yes, even car salesmen, we have been made to believe that having debt is okay. Some even think having debt is good. If you don’t think you’ve been persuaded into thinking of debt as a necessary means to an end, then your own brain has probably rationalized it for you.

We work hard, right? Long hours, we put up with a lot of “stuff” at work, we spend most of our time at work, even some of our “free” time is spent at least thinking about work. We deserve this car, big screen TV, smartphone, designer clothes, just fill in the blank. And if I don’t have the money in my checking account for said item, I’ll just put it on my….you got it, credit card.

The average American household, when only looking at credit card debt and student loan debt, owes someone else $45,000. That does not include all of the $$ they’ll pay in interest, nor does it take into account debt on our cars and houses.

So even though our society says it’s okay for us to be in debt, and we want to “keep up with the Jones”, I don’t think debt is something any of us want to have when we die. Do we really want to pass that on to our kids, or have our children believing debt is normal? Fortunately, for those of us who are Believers in Christ, the Bible teaches us about what debt really is.

The Bible on Debt

Matthew 6:24 No one can serve two masters, for either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve God and money.

Proverbs 22:7 The rich rules over the poor, and the borrower is the slave of the lender.

Proverbs 17:18 One who lacks sense gives a pledge and puts up security in the presence of his neighbor.

So, after having read a few bits of Scripture on debt, we can see that debt is another area in which Christians are called to be different. Proverbs 22:7 is the one that really hit home for me. Upon entering the FPU class, I could literally feel the weight of our debt. It made me feel bad, sick, depressed, and desperate for answers.

A New Look at Debt

Now that we are seeing debt for what it really is, let’s talk about how to get rid of it. There are hundreds of websites and speakers willing to share with you the secret on getting out of debt, but I am going to share with you what I learned from Dave Ramsey’s Financial Peace University. Let me preface with this and be completely honest, we do not follow his plan 100%. There, I said it. Sorry, Dave.

The Debt Snowball

Unlike some other financial advisors, Dave Ramsey doesn’t think interest rates should matter much. For instance, some people will tell you to pay off the loan with the highest interest rate first, he doesn’t. We start with the smallest debt we owe, no matter the interest rate. Here’s the idea:

1. Figure out minimum payments on all debts. How much do you have to pay each month?

2. Through budgeting, figure out how much you can absolutely put toward debt a month. We want to attack this thing, so evaluating needs vs. wants is important here. Do you need cable? Can you cut for the next two years to pay off debt? Clothing allowances? Go through all of your expenses.
3. Now that we know how much we have to spend on debt, make as large as a payment as you can on your smallest debt, keeping others at the minimum.

4. Once you pay off smallest debt, take that payment and stack it on top of the next largest debt. 
5. Repeat until all debt is gone!

Let’s use some unrealistic examples of debt here just to see that played out.

Debt 1: $100
Monthly Min. Payment: $10

Debt 2: $300
Monthly Min. Payment: $25

Debt 3: $500
Monthly Min. Payment: $50

Total Monthly Debt Payment: $85

First, take each debt down until you’re paying only the minimum. Now, after having a budget meeting with your spouse (or accountability partner), decide how much of your income you can put toward debt. Let’s say you can pay $100 on debt each month. If we’re only paying the minimums we have $15 left over.

Starting with the smallest debt, Debt 1, we are going to add 10+15=$25  (minimum plus our extra) monthly payment. We will have this debt paid off in 4 months.

Upon paying off this debt, do something to celebrate. How do we usually celebrate paying off a debt? Sushi!!

Tackle Debt 2: After 4 months of minimum payments, we have $200 left to pay. Roll the $25 from Debt 1 into our $25 Min. Payment, and we’ll pay $50/month. We’ll have this paid in 4 months.

Tackle Debt 3: Now, our last debt. We’ve paid minimum  for 8 months now, leaving us with $100 to pay. We’ll pay this off in one month.

Obviously this dumbed-down version of The Debt Snowball is not realistic and does not take interest into account, but you get the idea right? Put as much of your income toward your debt as you can starting now, don’t settle with just making the minimum payments any longer! Pay off your smallest debt first, that way you will be able to reach small victories along the way. Once the smallest is paid off, celebrate, and roll the money you were paying there into the next largest debt, and so on and so forth. When we attack our debt, we will reach financial freedom quicker.

That’s how, my friends, we were able to pay over $16,000 of debt in less than 9 months. We implemented some other things as well, stay tuned for those. Fortunately, we had money sitting in a couple different savings accounts, just hanging out, doing nothing for us. Dave Ramsey gave us a totally new perspective on money and debt. Instead of letting that money sit in savings, making us about .72 cents in a year, we dumped it towards debt. We paid off our 2011 car less than a year after purchasing it, paid off my husband’s “career starter loan”, and are able to start tackling student loan debt at a furious pace. Now, instead of carrying that debt well into our 30’s with us, we plan to have those paid off and be debt-free by the time I reach 27.

Do you worry about your debts? Are you feeling like a slave to whom you owe the money? Are you furiously fighting your way out of debt like we are?

2 responses to “Snowballing Debt: How We Paid off $16,000 in 9 months

  1. Yes, we have debt! It tops my list for one of sources of anxiety! College loans are just ridiculous, at least for us! But we are paying on them, every month. I do have a question… Don't you want some money in savings, just in case? For emergencies… Washer quits working, new car tire, medical emergencies….


  2. Brianne, that is a great question! I am so glad you asked. I plan to share another post on savings and debt, but until then here's another aspect of his teaching: Even before attacking debt, open an Emergency Savings account, and work until you get $1000. Most “emergencies” like the ones you mentioned will not be more than that. After you've secured your $1000, attack your debt. Should you need to dip into your Emerg. Fund (and it's strictly for emergencies, nothing else), cut back on paying debt for a few months and build your $1000 back up.

    Building a savings account for “living expenses” comes after you've tackled debt. Although we don't follow this 100%, (we do have some “life” savings) our main focus right now is definitely attacking our debt with “gazelle intensity” a term he LOVES to use! 🙂


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