Our Debt Snowball – March

3 months = $9,326.47 in debt paid off

I’m weeks late, but I owe you all a monthly update on our Debt Snowball.  Just to recap, in January we began our trek to being debt free by following Dave Ramsey’s Total Money Makeover.

To paraphrase, you make a list of all of your debts from smallest to largest.  You pay minimum payments on all of your debts, except for the smallest.  Every extra dollar you can spare gets put towards your smallest debt, until you have successfully paid it off.  Once the smallest debt is eliminated, you move on to the next smallest.  You are able to roll in the monthly payment you were paying on debt one, in addition to all the extra dollars you can spare, and put it towards the second debt.  This is how the snowball gets rolling.  The more debts you pay off, the more you have to put towards the next and so on and so forth.

In addition to paying off our debts we continue to put small increments into our savings account, since we are still in the process of house hunting and want to continue to see our down payment grow.

In January we started with one of the student loans still out from my husband’s undergraduate degree, with a balance of $2,993 and a monthly payment of $127.  We were able to scrimp and save and really scrub our budget and were able to put $1,520 towards that loan.  I couldn’t believe we were able to come up with that much extra!  It cut the loan in half!

Come February we paid off the balance of $1485, and celebrate having paid off our first debt!  Now we took that monthly payment of $127 and were able to roll it into our next debt.  Next up with a credit card with a balance of $1895 and a monthly payment of $60.  In February we were able to contribute $3,073 to our debt snowball.  Yes, this is a huge amount.  No, we did not just have that much extra laying around.  There were a couple of contributing factors.  My husband received a stipend for his part time coaching gig, and I received an unexpected bonus from work.  Since these are not income amounts that we budget, we just took them an applied them directly to our debt.  At this point, two months in, we had paid off $4,593 in debt!  It felt amazing!

Now, welcome to March!  Our second, the credit card that started with a balance of $1895 was down to $315.  It was a small enough amount that we were excited to pay that off quickly.  By March 3rd we were able to celebrate having paid off our SECOND debt!  So now we were able to take the monthly payment of $127 from debt one, and $60 from debt two, an automatically be able to add $187 monthly to our next debt without changing anything.  Next up was another credit card with a balance of $1820 and a monthly payment of $45.

This month we were able to scrounge up $1615 of our own money, and then made the decision to take $3118 out of our savings to really eliminate a fair amount of our debt.  Currently our house hunt is on a pause, so we were comfortable with using this amount, which still left us with our down payment goal sitting in savings.  That meant that in March we paid off a total of $4,733.47.  We celebrated having paid off our THIRD debt!

We are have now started chipping away at the loan we have our on my husbands car.  We started with a balance of $6,011 and a monthly payment of $234.  Each month, without changing anything, we are able to apply $127 from loan 1, $60 from loan 2, and $45 from loan 3, for a total of $232.  That almost doubles what his monthly car payments were!

So far in 2016, just 3 months in, we have paid off a total of 3 debts and have started on our 4th.  We have put $9,326.47 towards our outstanding debt.  UNBELIEVABLE.

We definitely know that not everyone will have the ability to take savings and apply chunks of money to outstanding debt.  Dave Ramsey actually suggests that you completely wipe your savings, except for a $1,000 emergency fund, and put it all into debt.  We just aren’t ready to take that leap just yet, but we are enjoying seeing how fast our snowball is growing.  Maybe work bonuses or stipends are not a part of your life, but that is ok.  Even without all of those extra large amounts, I have been amazed at what we can contribute to paying down debt just by really looking at our spending habits and scrubbing our monthly budget.

The month of April will be more of a “normal”  month for us.  There won’t be any extra income amounts coming in, and we won’t be drawing down from savings.  I’m interested to see what a regular month looks like for us, and I’m excited to see our snowball continue to grow and make momentum.

Thanks for joining us on our journey!