We decided to use the Snowball Method to get out of debt. There are quite a few methods out there, but we felt that the Snowball Method was the most advantageous to us. The reasoning is that we needed the extra psychological boosts that the Snowball Method is known for giving.
After picking the method, we listed out each of our debts in order, according to the way that the Snowball Method does it (If you ended up using a different method, list your debts in that methods' specific order).
Next, we worked on our budget. We worked on compressing our expenses and increase our savings each month. This step took a lot of work...but after analyzing how we were spending our money, we realized that we actually had a lot more that we could save each month.
Once we had worked on the budgeting piece, we started putting that lump of extra savings each month towards our debt, in a systematic approach. We paid the minimum payments on each debt, except for the first debt on our list.
After we finished off the first debt, we continued down the list by taking the minimum payment from debt #1 and added that amount into the extra funds that we had to pay our debts each month. We continued in this pattern until we had all of our debts paid off.
If you are struggling with debt and you also need to make a New Year's resolution for 2017, why not tackle both at the same time? Just imagine what being debt free would do for you and your family?! I'm willing to bet that your life would look a lot less stressful and way more fun!
I'll finish with this final excerpt from my article:
"Now that we are debt free, our world has changed! And I hope that your world can change too...Keep your head up and your shoulders back... be confident that you can get this done!"
I hope 2017 will prove to be a breakthrough year for your financial life. Cheers!
Are you ready to finally take control of your finances? Let my budgeting spreadsheets help!
Just fill out the form below and I'll send you the link to get the same exact budgeting spreadsheets that I use each month!
Included in the workbook:
- Monthly budget form
- Breakdown of savings form (for your sinking funds)
- Overview of your financial plan
I've been using these same forms since August 2011 and have grown my family's net worth 500% tracking our money using these forms!