Introduction
The debt snowball method, made popular by Dave Ramsey, focuses on paying off your smallest debts first to build motivation and long-term momentum.
Steps
Step 1: List All Debts
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Use Google Sheets to list balances from smallest to largest (e.g., $500 card, $2,000 loan, $10,000 car loan).
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Action: Build your debt list in 30 minutes.
Step 2: Build a Starter Emergency Fund
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Save $1,000 quickly to prevent new debt.
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Action: Cut discretionary spending to save $100–$200 this week.
Step 3: Pay Minimums + Extra on Smallest Debt
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Keep paying minimums but focus extra funds on your smallest balance.
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Action: Direct $200 toward your $500 credit card this month.
Step 4: Automate Payments
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Enable autopay to avoid missed deadlines. Apply windfalls (e.g., bonuses, refunds) toward debt.
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Action: Set up autopay for each account today.
Step 5: Celebrate Wins
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Motivation is key—reward each milestone modestly.
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Action: Treat yourself (e.g., a $10 coffee outing) when the first debt is gone.
Step 6: Roll Over Payments
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Redirect freed-up payments to the next debt, building a snowball effect.
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Action: After clearing the $500 card, apply its $200/month toward your $2,000 loan.
Outcome: Quick wins build momentum, helping you stay motivated as you eliminate debt layer by layer—all on track for a debt-free 2025.
