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How To Create Your Debt Snowball

If you’ve ever read The Total Money Makeover (my favorite book!) or listened to Dave Ramsey’s radio show (check out link to find your local channel) – then you’ve heard of his debt snowball. And if you’ve been around Wife.Mother.Teacher. for long – you know that our family is working on a very large debt snowball.
Experience has shown me that most people who’ve listened to Dave know that using the debt snowball to get out of debt would be a good decision for their family, but many seem lost on how to actually start their debt snowball, so here’s a 4 step plan that anyone can follow to create your very own debt snowball & start to see the benefits of your debt snowball working right away.

1. Make a list of your debts.
Get a blank piece of paper, or open a new document on the computer. List all your debtsΒ (other than your primary residence mortgage). Here’s a few ideas to get you going.
  • Car loan
  • Chase credit card
  • Sallie Mae student loan
  • Wells Fargo student loan
  • Personal loan at your credit union
  • Personal loan from Grandma
  • Tax assessment from last year’s audit
2. Organize & collect financial documents for each of these debts.
If you haven’t already, this would be a great time to spend an hour digging through your mountain of papers and organize them by debt company. Having your financial paperwork handy and organized will make your conversations with each company over the phone much easier & help to answer any questions you may have.
3. Call or go online to get your most up to date payoff balance.
I’m assuming that at this point you are no longer borrowing money, have cut up your credit cards and won’t see your debts increase in size unless we’re talking about interest. (If these things aren’t true, then you aren’t actually at baby step 2 yet – reread The Total Money Makeover.) It’s time to get the current balance (principal plus interest) on all of your debt accounts. Some companies may call this your current payoff amount, either way is fine. If you have multiple accounts or loans through one company, make sure you get the total payoff balance of each debt separately. (I personally like to speak to an actual person when I’m verifying this information, so this usually turns into a 30-60 minute process for me as I often have to wait on hold, but if you’re content with online account access you’ll probably find that faster.)
4. List out your debts from smallest to largest.
Now that you have the balance of each of your debts, list them out smallest to largest on a blank piece of paper. Keep in mind that many debts may actually be broken down into multiple smaller accounts – you want to list each one separately. For example, I have three separate loans through Wells Fargo, so instead of just listing one lump amount for Wells Fargo I make them each an individual debt on the list – Wells Fargo #1, Wells Fargo #2 & Wells Fargo #3.
There you have it… your debt snowball! Now the exciting part starts – time to pay off your debt. (For more information on how to best go about paying down your debt snowball or to learn about why we don’t list debts by interest rate, check out Dave Ramsey’s book The Total Money Makeover or sign up for your local Financial Peace University class – I highly recommend (& love) both.)
Tell us about your debt snowball progress. Have you started to take control of your finances? I’d love to hear from you in the comments below so that we can root each other on

Disclaimer: This post may contain affiliate marketing links that compensate me for sales.


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