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Let it snow, let it snow, let it snow!

The snowball effect!

The snowball effect is defined by Wikipedia as: "a process that starts from an initial state of small significance and builds upon itself, becoming larger (graver, more serious), and also perhaps potentially dangerous or disastrous (a vicious circle), though it might be beneficial instead (a virtuous circle)." For the purposes of this blog, we are going to focus on the snowball effect being a virtuous circle that helps you pay off your debt.

I was first introduced to the snowball effect as a way to pay off debt through (you guessed it!) The Total Money Makeover. However, Dave Ramsey is not the only proponent of using the snowball effect to pay off your debt. This finance blog details the process as well (with a few nuances), and CNBC calls it the best way to pay off your debt (although they give credit to Dave Ramsey for popularizing the method). I'm sure if I did more googling I'd find others who also suggest this method. The point is that this method has been tried by many people, and found to be helpful. Will you find folks who disagree? Of course! But you came to my blog, so I'm going to push this method because it helped me to become debt free.

So what is the method exactly? Well, let me tell you.

Now that you are a budgeting guru (or on your way to becoming one), you should be listing how much your minimum payment is for each of your student loans, your car payments and your credit cards. Make a chart with four columns. Take all of the debt that you owe, and write it in the first column from lowest amount owed to highest amount owed. In the next column, fill out the monthly interest rate. The following column should have your required minimum monthly payments, and the last column should include how much you are able to pay on that debt this month. An example would look like this:

Amount Interest Monthly Minimum Current payment

$8,000 6.5% $54 $100

$10,000 6.5% $130 $130

You should organize your chart from lowest to highest dollar amount, but you can also change up the order due to how much interest is owed per month if the total amount owed is similar. Since I'm not a very math-y person, I just did my chart in order of dollar amount. It is important to have the chart ordered from lowest to highest because it's easier for you to pay off a lower amount. This gives you momentum and motivation to continue to the next item on the chart. If I can pay off the $8,000, then I can pay off the $10,000.

The snowball effect comes in once this chart is made and you've begun budgeting. You should continue paying the minimum amount on each of your debt accounts, but if you have extra money in your budget, you should put that towards your smallest debt, on top of the minimum monthly payment you are already making. Once that first debt is wiped out, all the money you were paying toward the initial debt plus the minimum payment for the next debt should go toward that next debt. For example, if I paid off the $8,000, I now have an extra $100 to add toward my $10,000 debt. So now I am paying $230 monthly on the $10,000. This snowball of money gets bigger and bigger as you continue to pay off debt.


I graduated undergrad with about $30,000 in student loans. An additional $5,000 was added for graduate school. Thankfully, I didn't have credit card debt, or a car note so my focus was solely on paying down my student loans. I also owed my sister and my cousin some money when I first made my snowball effect chart. Those two debts were added to the top of my chart because they were the lowest amounts. I paid them off quickly, and it really made me feel good.

I tackled my student debt by determining how much extra per month I could put toward my loans. I would divide that number by the amount of Fridays in that month, typically four, and every Friday, I would put that extra amount towards my loans. It sounds crazy, but I used to get so excited for Friday to come along so I could pay that extra amount. I would see the loan amount get lower and it would lift my heart.

When I decided to go to graduate school, I still continued this method, even though I had to take out a small loan that first semester. I knew I could pay off my student debt if I kept pushing, so I kept pushing. I only paused once, for a period of about nine months. I used that period to save up the rest of the money I needed for my graduate school tuition so I wouldn't have to borrow another penny. That nine-month period, plus the $1,000/semester my job gave me toward tuition ensured that I could continue on my getting-debt-free journey.

Paying off your debt is hard. It takes determination and commitment. But it is also rewarding. And I don't just mean rewarding to your emotional state or your peace of mind, although that is important. The first year I spent paying off student debt, I filed taxes and got a huge tax refund back. You receive credit for the student loan interest you pay each year. The more you pay, the bigger the credit. Guess where that tax refund went: toward my student loans.

I made a choice to put all my extra money toward my student debt because I didn't want to live beholden to anyone. I wanted to reach the age of 30 with my Masters degree and no student debt, so I followed a plan that would allow me to reach that goal. I reached it by 27. I can't wait to tell you what being debt free allowed me to do, but that's a story for another blog post.

I am a regular person. I'm not a mathematician. I didn't use any fancy tricks. I was just determined. Some of you may have less debt than I did, and some of you may have more. It doesn't matter where you are, or how much you owe. If you decide you don't want to be in debt, you don't have to be. I'm sure people tell you that everyone has student loans and that they'll never pay it off, so why should you? Or that student debt is "good" debt.

There is no such thing as good debt. And you don't have to be like everyone else. Be different. Use your money how you want to, not how Sallie Mae is telling you to use it.

The purpose of this whole blog is to tell you that if I can do it, you can do it. Your journey won't be the same as mine and that's fine. We need people to have their own journey so that they can tell others that what they did is possible. It was possible for me, and I know it's possible for you. So pick up your snowball and start rolling through that debt.

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