How To Start A Debt Snowball?

Not having enough cash can cause a headache especially when you want to pay off mortgage loans, insurance scheme, student loans, car loans and all other bills you can think of. This can push you to the extent of incurring debts, although, you never planned for such.

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When I first started incurring debt, I didn’t like it one bit. But I had no choice than to pay for my degree in whichever way.

It was about that time that I needed to pay off a $20k loan.

However, I had four different loans to pay off.  After doing some research and getting some badass tips from Dave Ramsey’s pieceThe Total Money Makeover I got an amazing idea that changed everything about my finances.

This is my own story of…

How To Slay Debts and Have Peace of Mind

You dig? Yes, it’s the Snowball thing.

When we were kids, you could remember how we rolled up snowballs little by little to form a boulder and then slide it down the hill.

This is exactly how someone came up with the debt snowball plan.

The first step to getting rid of your debts is a firm resolution to reject debts.  Another concept is the debt avalanche—an idea proposed by another school of thought.

What is a Debt Snowball?

Debt Snowball is a debt control strategy used to pay off debts starting in a sequence of small-sized debts to the largest rather than those with higher interest rates. Getting rid of the smallest debts causes a positive mental impulse and has a “snowball” effect.

How it Works

This method is easy to follow.

  • List out the debts as a sequence from the smallest to the biggest.
  • Make the minimum payment on all loans each month except for the smallest one: on that one, pay as much as you can.
  • After making your first payment, roll the regular fee you had been paying on that loan to the next-largest debt until it is paid off. (1st debt total payment + minimum payment + minimum payment of second debt)
  • Continue the process until the payment “snowball” becomes outsized that it quickly knocks out all unpaid loans out of the way.

Example below:

January 2017





Family Loan




Car loan




Student loan




Credit card







After managing to cut off unnecessary expenses and you are getting extra income from a side job, say $300, then you can pay off the minimum of the first loan in a month (you can pay as much as you can and get rid of it).

You roll over that same amount of the car loan by paying a sum of $350 (your income plus extra payment) and you can clear that in about four months.

Wow! You are making progress, right!

Move on to the student loan. Now, you will accumulate the minimum payment for the student loan and car loan and add it to your bonus income—here, you’d have accrued a sum of $425.

Progressively, you will pay this sum to clear the student loan in seven months. You’ve cleared this and you’re not stopping.

For me, the first loan was what really made us enthusiastic and I just wanted to keep passing over those unsettled debts till I was done. It was perfect for me. Dave Ramsey has helped us to realize how effective this plan can be.

Lastly, your unsettled debt is the credit card of $6000.

How do you go about this? Follow the previous steps.

With your regular pay of $300, you will add up the minimum payment on each debt to accrue a sum of $490. You can clear this debt off in 12 months.

Isn’t it interesting? Now, you’re good to go.

What a sigh of relief? You’re able to clear a debt of $10700 in 24 months with just $300.

By December 2018, you’d have no debt hanging on your neck.

Continue reading…

Dave Ramsey is a financial advocate of the debt snowball. For more insight on debt management, you can check this link.

Also, Rob Berger is a contributor to Forbes, you can check out this article and how you can make use of debt calculator here.

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October 29, 2017