How to Get Rid of Your Debt Forever (Using the Snowball Method)
Let’s face it. Debt sucks! If you carry high balances on credit cards, you know exactly what I’m talking about. Paying out all that money every month to high payments that are mostly covering interest just makes you feel like you will never get out of debt. But you CAN get out of debt! I once used the snowball method to pay off over $60,000 in debt. You can too!
The Snowball Method
The Snowball Method helps you get out of debt much faster than if you just paid the minimum each month. The way it works is you accelerate your payments by putting extra money toward your debt with the smallest balance first. Once you pay off that debt, you start working on the next smallest debt.
The kind of debt this works for is credit card debt, car loans, consumer loans, etc. But for paying off your mortgage early, you would use a different method which I will cover in a later post on MommaMoneySense.com. For now, let’s try to get your credit cards and loans paid off quickly.
There are 4 easy steps to the Snowball Method
List out all your debts on the Debt Snapshot Worksheet. List all your debts from smallest to largest balance.
Determine how much extra you can put towards your debt. If you have a lot of debt, like $20,000 or more, then you should try to pay an extra $500 per month if possible. But if this isn’t in your budget, then do what you can. (If you are living paycheck to paycheck then you will need to make some changes before you can pay down your debt. Start with the basics of making a budget and cutting back expenses before tackling your debt.)
Fill out the Debt Snowball Worksheet. Put your extra payment amount in and calculate how soon you will pay off your first debt. Then continue with each one after that.
Start making payments for quick progress. Pay just the minimum payment on all the debts except the smallest. Pay the extra amount on the smallest debt. When that one is paid off, you take all the money you were paying on it and put it towards the next smallest debt. Once you pay off the first debt, you will be so excited about your progress that you will easily continue to stick with the Snowball Method.
You Could Be Debt Free
The average household in America owes over $16,000 in credit card debt. This can be paralyzing. Debt keeps you from having the flexibility to do the things you want and to enjoy your life. If you have a debt problem and you lose a job or have unexpected medical bills, things could quickly spiral out of control. If you have credit card debt, I challenge you to use the Snowball Method and get your financial freedom back. Download the Snowball Method sheets below.
What if there was a budgeting app that forced you to follow your budget? Sticking to your budget is one of the most difficult parts of budgeting. That’s why some investors got together and created a special app that forces you to stick to your budget. How’s that possible? I’ll explain.
The way it works is you set up a bank account with ProActive Budget and they issue you a debit card. ProActive Budget uses a real bank and is FDIC insured.
Then you use their app to set up categories for Budget Envelopes, like groceries, entertainment, etc. Once you set the envelopes up, you set a spending limit for each category. When you go shopping, you select an envelope to use. Once the money is gone from that envelope, the card won’t allow you to spend any more of your money. It’s a simple, yet powerful tool to limit your ability to overspend. It basically forces you to stick to your budget.
I was so excited to share this great idea with you that I reached out to ProActive Budget and asked for a discount for my readers. If you decide to sign up for this budgeting app, click here and use the code MOMMA$ and they will give you $5 off your membership.
A Total Solution
I’m recommending this app because it has so many great features. It really works as a full budgeting solution. It allows you to share your budget across devices with a spouse or partner. Every dollar has a job in the budgeting app and it’s safe and secure just like a regular bank account. The card works online or in any store and even in ATMs, but declines purchases that go beyond the limits you set for yourself.
Of course, the app has a monthly fee, but it’s worth it. It can really help people get their spending under control. It costs $5.75 a month for one user and an additional $2.42 per month for a 2nd user. But you can get $5 off with the codeMOMMA$.
ProActive Budget has quite a few testimonials on their website showing how couples made amazing financial changes once they used the app. Here’s one user’s experience from the site:
Letisha: “We’d usually get down to $15 for a week before payday. After a month with ProActive we had $300. My husband and I both have our envelopes at any time.”
ProActive Budget is basically an electronic version of the Cash Envelope System. It works great if you don’t want to use the cash version with the paper envelopes. It definitely forces you to stay on track financially. If you decide to sign up for this budgeting app, click here and use the code MOMMA$ and they will give you $5 off your membership.
If you need help setting up a budget, click here. Learn about the Cash Envelope System here. Get your FREE copy below of The Modern Mom’s EPIC Guide to Easy Budgeting!28 Page Workbook with 87 ideas to reduce expenses, 14 beautiful worksheets, 7 bonus lessons, and full, easy-to-follow instructions.
This post may contain affiliate links, which means I may receive a small referral credit at no cost to you while still providing you the best offer I’m aware of. Please read my disclosure page for more information.
This number might surprise you, but it shouldn’t. With the flashy ads everywhere, bright displays, and colorful, must-have products, how can a person resist? The problem is, many people end up living paycheck to paycheck or going into debt because of impulse shopping. But you can stop this from happening to you.
Companies spend millions of dollars figuring out ways to trick your brain into being impulsive enough to buy their product on the spot. They employ specialists in marketing and psychology to understand how consumers think and act. Then they use that info against you to get you to purchase things.
Here are a few marketing schemes you might have noticed.
Did you know that financial worries keep 62% of people up at night? According to a survey by Creditcards.com, money worries interfere with a good night’s sleep. If you are one of those people, then you know exactly what I’m talking about. But how do you get over money worries? You fix your money problem!
What? There’s a way to fix money problems? Yes. Money problems start because of mismanagement. When data shows that 50% of Americans live paycheck to paycheck, you know there is a serious money management problem in this country.
Stop Overspending Right Now with The Modern Mom’s EPIC Guide to Easy Budgeting!
Do you need a budget? Find out by taking the following quiz:
Are you living paycheck to paycheck?
Are you drowning in debt?
Are you making bad purchasing decisions?
Are you behind in your bills or do you get late fees on your bills?
Do you wish you could save for the future, but you can’t?
Are you afraid of the next big financial emergency because you don’t have any savings?
Do you need help organizing your finances?
Do you want to budget, but you don’t know where to start?
Do you wish you could stick to a budget you have made?
Do you feel like your finances are out of control?
If you answered yes to any of the above questions then you need a budget! Budgeting doesn’t have to be a pain. It can be easy and you don’t need a degree in finance to figure it out. Anyone can do it! Find out how…
First, download the free eBook: The Modern Mom’s EPIC Guide to Easy Budgeting. It’s epic because it shows you just how easy budgeting can be. Sign up below to get the free download. Then follow the 5 simple steps below.
Easy Budgeting Takes Just 5 Simple Steps
Step 1. Find Out How Much You Spent Last Month
For this step, you can use the worksheet from your download called, “How Much Did I Spend Last Month?” All you need is your bank statements and credit card statements from last month. Then use the info on the statements to fill out the worksheet. If you have quarterly or monthly expenses that didn’t show up, divide them into monthly amounts and add them to the worksheet. Now you can see exactly what you spend. It can be eye-opening to see the actual totals for each category. So easy!
Step 2. Evaluate Your Current Situation
Using the same worksheet, list the monthly total of all your regular and irregular income at the top. (Use Appendix A in the packet if you need help calculating your monthly income. Or click on this post.) Now minus your total expenses from your total income. If your total is negative, you spent more than you earned and that means you either used up savings or added to your debt. If your total was zero or positive, but you have no money to put into savings, you still have a problem. You can fix these problems with the remaining 3 steps.
Step 3. Set a goal
Setting a goal is the most important step when making changes in your life. Under ideal circumstances, a person should be able to live on 80% of their income and use the other 20% to build an emergency account, give to charity, save for the future, or pay off debt. If you are not able to live on 80% of your income because your expenses are too high, then you need to cut back. If you can’t live on 100% of your income, then you definitely need to cut back your expenses!
You’re in luck! I have created a huge list of ideas on how to reduce expenses. You can find it in your download on the page called, “87 Ideas to Reduce Expenses.” Select a few ideas from the list to try this month. Then, set a spending goal for the month. List your goal at the top of your “Monthly Budget” worksheet.
Your goal doesn’t have to be a drastic change from last month’s spending, just a little change (unless you are completely committed to a total financial overhaul). The reason for this is if you make the goal too difficult to reach then you might lose interest in budgeting and go back to old habits. If you make small improvements each month then you will gradually get things back on track.
Step 4. Make a plan
The plan that will help you reach your goal is your budget. It’s basically a roadmap for your monthly spending. You already put your spending goal at the top. List your income at the top also. Now it is time to set up the plan to achieve your goal.
Divide your spending goal into categories on the “Monthly Budget” worksheet. See if you can get yourself to spend a little less in certain categories than you did the prior month. Once you have the budget filled out, put it on the fridge so you can see it regularly. At the end of the month, you will fill out the actual amounts to see how you did. That was easy right? Now you’re almost done.
Step 5. Pick a strategy that will help you stick to your budget.
Use the envelope system with cash only purchases. Then when you go to the store, you can only spend what is in the envelope. This prevents you from overspending. See Appendix B for a cash envelope template.
Or try having an accountability partner. This is where a friend or relative agrees to do the process with you and you check in with each other to make sure that you are sticking to the plan.
Or sign the personal contract in Appendix C of your booklet to promise yourself you will stick to the budget.
Whatever strategy you choose, make a commitment to improving.
(The packet also includes several bonus printables to help you manage your finances.)
At the end of the month, see how you did. Did you reach your goal? If so, congrats! Continue using this budget process each month and get yourself on the road to financial freedom.
If you didn’t reach your goal, try again. Don’t give up just because it was hard to adjust your spending. The only permanent failure is giving up. As long as you keep trying, you didn’t fail. Financial freedom is within your reach if you keep working toward it. You can do it!
Signup below to get your FREE copy of The Modern Mom’s Epic Guide to Easy Budgeting!
The Modern Mom’s EPIC Guide to Easy Budgeting:28 Page Workbook with 87 ideas to reduce expenses, 14 beautiful worksheets, 7 bonus lessons, and full, easy-to-follow instructions.
Have you ever gone to the store to get Easter supplies, planning to only buy a few things, but you end up buying the whole Easter section? Ok, well maybe not the whole Easter section, but if you get up to the checkout and the total due surprises you, you might feel like you bought the whole Easter section. If this is you, you might need a budget for the holiday. There is no need to overspend on Easter when there is an easy way to avoid it. With our free printable budget and planner, you can have an affordable and organized easter in just 5 steps.
Easy 5 Step Plan for the Ultimate Affordable Easter (with free printables!)