Have you set a goal to start your journey to being debt free this year? We can guide you to the tools that will make that goal attainable! If you’ve ever heard The Dave Ramsey Show on 93.7 The Light, you might already know bits and pieces of the way he teaches to handle your finances, but if you’re unclear on how to tackle your debt, read on!
In this blog, we’re going to explain how to become debt free using Dave Ramsey’s “Debt Snowball” method. At the end, you’ll find links to all the resources you’ll need to be debt free!
Note: if you are not yet on a budget, use this link to download a free guide to budgeting from Dave Ramsey’s website. Getting yourself on a budget is the first step to financial freedom!
Getting Started
The idea of the debt snowball is that you start off with a small little snowball (a payment), roll it downhill (your list of debts), and the further it rolls, the bigger it gets (paying off larger and larger amounts as you go. (Momentum!)
The very first step is saving a $1000 emergency fund. This is to help prevent you from taking on any new debt in the case of emergencies (example: car trouble). Any extra money in your budget will go towards the debt snowball.
Debt Snowball
You will start by listing each debt in the order of smallest to largest. Next to each debt (except the first), list the minimum payment. Next to the first debt on the list, write how much you can pay on it this month. For example, if after you do your budget (and after your $1000 emergency fund is saved) you have $100 left, you put that towards your first debt. You continue paying as much as you can until that debt is paid off, continuing to pay the minimum payments on the other debts. Once debt #1 is scratched off the list, you move to the second debt paying the minimum + the amount you were paying toward the first debt. See how as you go down the list, the amount you’re paying each month toward the next debt grows and grows? That’s the debt snowball, and you’ll be shocked to see how fast you can start paying off debt when you’re focused and determined.
Resources
Dave Ramsey’s website (link below) is chock full of helpful resources and I’ve linked to a couple of my favorites. Listening to his radio show or podcasts is especially encouraging and helpful, since he takes callers and helps them through places they’re stuck or celebrates their wins with them. You’ll be planning your “I’M DEBT FREE!!!!!!” call!!!
- https://www.daveramsey.com/
- https://www.daveramsey.com/store/product/the-total-money-makeover-book-by-dave-ramsey
- https://www.daveramsey.com/store/product/deluxe-envelope-system
- https://www.daveramsey.com/store/product/the-contentment-journal
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