Snowballing one way to get out of Debt

If you are drowning in debt, considering debt consolidation or worse bankruptcy, consider this plan first. You do not need a debt consolidation service to pull yourself out of debt. Having a plan and paying yourself out of debt is better for you and your family’s pride, credit and understanding of the credit world.


It is critical to develop an accurate budget that depicts your current assets and liabilities. Include all of your debt, your regular monthly bills, groceries, haircuts, lunches, everything! It is important that you account for all of your outgoing money.


From your budget, take all of your debt and write them down with the debt you owe the least amount on top. Next to it write the total amount you owe and the minimum monthly payment. A spreadsheet program such as Microsoft Excel makes this process a lot easier! You may have a list that looks something like this:

Credit Card 1 300.00 15.00
Credit Card 2 750.00 35.00
Car Loan 4,000 290.00
Student Loan 12,000 325.00

It does not matter if you have three accounts or 23 accounts; list them all in order of amount owed. This is where your budget comes in. The fact is if you perceive yourself in needing help in getting out of debt, you are probably in a position where you cannot pay extra on any of them each month. You must look at your budget carefully and find the wasted/extra money that is hidden there. It may be your grocery budget or the lunches you buy out every day at work. Your goal is to find four times your smallest minimum monthly payment.

Take the account you have first on your list, look at the minimum monthly payment and multiply it by four. In our example it would be $15 X 4 = $60. Your goal is to find $60 in your budget.


Pay the $60 to the first account. Make all of your other debt payments normally. You will have your first account paid off in five months. When it is paid off, apply the $60 to the next account, whose balance will be close to $575. This makes a monthly payment of $60+$35=$95. You will pay off the second account in seven months. Continue the process by applying the $95 to the next account’s payment.


This is not a get out-of-debt quick plan or scheme. On a minimum income it takes time to eliminate any significant amount of debt. By creating a plan you will know approximately how long it is going to take, work that plan with tenacity and persistence and you will be able to pay off your debt, and begin to live debt free! Keep in mind that your plan can be sabotaged with the introduction of new debt. Do not accumulate additional debt during this process.

Develop your plan now; every month that goes by adds additional time to pay your debt off in the future, plus interest! The first step to any retirement plan, savings plan or investment plan is eliminating this high interest debt. Living below your means, controlling debt accumulation, savings and investing are critical keys to your future financial health.