canadiandebtgirl

The Debt Snowball

In Uncategorized on June 15, 2009 at 10:33 pm

This is the method I am using to pay off my debt: its called the debt snowball.

First, you write down all you debts. For myself, I excluded my mortgage and student loans as they are not as essential to pay off right now. I also excluded by car loan simply because to me it is also not as essential to pay off at this time. I’ve had a car payment for the last three years, I need a car for work, and despite all the recommendations to include it in my debt calculation, for the sake of my own sanity and my own snowball, for now I have left it out.

Then you also include all the interest rates for each debt and each minimum payment. Make sure you are covering your interest every month, and maybe a little bit more! Sometimes your minimum doesn’t cover this, so run the numbers to be sure.

Then, tackle your smallest debt first. Or highest interest, whichever gives you the best feeling of achievement. In order to know how much you are paying towards debt, you need to work out a budget.

Instead of going into all the fine details here, I will refer you a blog entry at The Simple Dollar, a great resource for all things personal finance. This is the article here.

And if you want to play around with the numbers and the ‘snowball method’, I found an excellent free download spreadsheet you can use! Just check it out here.

Screenshot of Debt Reduction Calculator

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  1. […] Card #4 is actually a LOC and is last on my debt repayment plan as it has the lowest interest […]

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