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A debt snowball is an extremely popular method of paying off debt. It uses a very simple principle, pay off your debt from smallest to largest and roll the minimum payment for each debt over to the next.
So, if your smallest debt has a minimum payment of twenty dollars, when you pay it off, the twenty dollars from the minimum payment gets added to the minimum payment for the next smallest debt. This continues until all your debts have been paid. Since you get some easy wins from quickly paying off small debts it is easier to build momentum and keep going to pay off larger, more intimidating debts.
Even though the debt snowball works really well, you still have to manage to get it started in order to see results.
When you’re living paycheck to paycheck and there’s no extra money in the budget to get the debt snowball rolling, it can be really frustrating. Trust me, I get it.
So here are my top five tips to help jump start your debt snowball!
1. Cut Expenses
When you’re spinning your wheels and barely making your minimum payment the very first place to start is to cut your expenses to the bone. Cancel Netflix, turn the heat down a degree or two, cook from your pantry and do a no spend week, whatever it takes to free up money to get that first debt gone.
Don’t forget, this isn’t forever. This is a short term sacrifice for a long term win.
Take a really close look at your budget and see where you can free up a little bit of money. The debt snowball method works, but you have to get it started first.
Ten dollars here, twenty dollars there adds up and it will be worth it in the long run.
2. Sell Stuff
There are so many benefits to selling your unwanted stuff! Not only can you make some pretty decent cash, but this is a great way to declutter too.
You make some cash, and simplify your cleaning routine all in one go! Also, knowing that you’re going to make a bit of money often times makes it easier to let go of items that you might otherwise struggle with.
I’m a big fan of selling your things on Facebook, especially if you live in a pretty rural area. When you’re five miles or more out of town, yard sales just don’t get much traffic.
Do be very specific on when and where you can meet. For example, if you go into town once a week, tell people you can meet that day at a local store.
Or if you have family in a location that is better for a yard sale and you have a lot of things to sell, ask if you can hold it at their house. Maybe they’ll have things they want to sell too, and multifamily yard sales tend to get a lot more people to stop by and buy your stuff!
3. Side Hustle
Get a side hustle! These part time jobs are a great way to earn some serious cash to jumpstart your debt snowball. Offer to babysit your friends’ kids, mow lawns, get a part time job, start an online business, do freelance writing, sell crafts, there are sooo many options for side hustles.
Some people have even been able to replace their full time income from their side hustle, so don’t write it off as not being worth your time!
Plus, when you’re serious about paying off your debt even a couple hundred dollars extra per month can make a big difference in when you finish paying off your debt.
4. Tax Returns
Your tax return can be a great way to jumpstart your debt snowball!
If you’re one of the people who gets a sizable tax return, use it to pay off as much debt as you can. Just imagine the weight that will be lifted off your shoulders when you pay down or even pay off some of your debt. There are people who get a couple thousand dollars for a tax return. If you’re one of them then use it!
Instead of spending your tax return on something that won’t ultimately make your life better, pay off your debt. Get your debt snowball moving so you can actually accomplish your financial goals.
5. Bonuses
It’s really tempting to blow work bonuses on fun stuff. Since it’s a ‘bonus’ it’s really easy to feel like you ‘deserve’ to spend it on fun things.
Just remember how much less stress you’ll have when you’re debt free though, and pay down your debt as much as you can. Since you’ve already budgeted your money based on not having a bonus it’s all available to put toward debt.
Also, if you get a raise and your income increases, that does not mean your lifestyle should increase too. If you get a raise, keep your budget the same and put all of the extra from your raise towards debt.
You already know how to live on the smaller amount, just keep doing it.
It’s super discouraging when you’re trying to pay off debt and the numbers aren’t going down quickly, or at all. But by using these five easy tips to jump start your debt snowball you can start getting ahead and make some real progress towards finally becoming debt free.
These tips don’t have to stop once you start getting your debts paid down either. Keep using them and you’ll be debt free faster than you ever could have imagined!
What are your favorite ways to make some extra cash and pay down debt? Comment and share below!
