Welcome! Let’s Get Started with The Debt Snowball
Step 1: What is a Debt Snowball?
The debt snowball is a proven and effective way of paying off debt. Watch this quick 2 minute video for a simple explanation of the debt snowball:
Basically a debt snowball consists of 4 steps:
- Step 1: List your debts from smallest to largest
- Step 2: Determine the minimum amount that you have to pay towards your debt each month
- Step 3: Look at your monthly budget and determine how much you can pay towards your debt each month. For the debt snowball to work correctly, this number needs to be bigger than the minimum amount that you have to pay per month.
- Step 4: Pay the minimum payment on all of your debts and put the leftover cash towards the smallest debt. Continue with this process until the smallest debt is paid off and then start putting whatever cash you have left over towards the next smallest debt. As you continue to pay off each debt the debt snowball will move faster and faster.
For a more in depth explanation check out this post.
Step 2: Budget
In order for your debt snowball to work, you need to have a budget! Your budget will help you know how much money you can afford to put towards your debt snowball. Below you can download a free budget template that will help you to know how much money you are spending each month. This budget temple is completely free for you to use. It is a Microsoft Excel file. All you need to do is click the link below and complete the purchase process. Don’t worry, even though you go through the purchase process, you are not required to give any credit card information. The file is 100% free.
The following are a few pictures of what the budget template looks like:
Step 3: Start the Debt Snowball
Once you have your budget set up, you are ready to start with your debt snowball. Get started with the steps talked about in the video and listed above.