I believe we can all relate to moments in our lives where we’ve made decisions we later regretted, am I correct? Whether it’s impulsive shopping sprees or seeking instant gratification, we’ve all experienced the tug of worldly desires. The allure of material possessions and the pressure to impress others can lead us to be in debt and down paths that stray from God’s plan for us.
In a culture that promotes instant gratification and consumerism, it’s easy to fall into the trap of thinking we deserve everything now, without considering the long-term consequences. To be honest, for quite some time, debt has become part of our lives up to the point that it was already occupying a room in our house. Do you know what I mean? We thought that being in debt is just normal since our family, relatives, friends, and colleagues are also in debt. We felt we belong in the society because we too, are in debt and we can afford the monthly payments for our debts.
However, as followers of Christ, we are called to a different standard. We are called to live lives of intentionality, wisdom, prudence and self-control. The Bible reminds us of the dangers of chasing after temporary pleasures and earthly treasures.
“The wise store up choice food and olive oil, but fools gulp theirs down.”
Proverbs 21:20
This verse encourages us to practice delayed gratification and to prioritize what truly matters in the eyes of God.
Instead of succumbing to the pressure to keep up with worldly standards, let us focus on cultivating contentment and gratitude for what we already have. Let us seek God’s guidance in our financial decisions and resist the urge to make impulsive choices based on fleeting desires.
By aligning our hearts with God’s will and exercising self-discipline, we can break free from the cycle of compulsive consumption and find true fulfillment in Him. Let us remember that our worth is not determined by material possessions or instant gratification but by our identity as beloved daughters of the Most High God.
The Turning Point
In my daily time with God, He revealed that debt isn’t part of His plan for our family. He doesn’t want me burdened with constant stress over finances. “It is finished,” He assured, referring to His payment on the cross for our freedom, including from debt. God desires our family to live joyfully and debt-free, in line with His promises in Jeremiah for a better future.
For I know the plans I have for you,” declares the Lord, “plans to prosper you and not to harm you, plans to give you hope and a future.
Jeremiah 29:11
Praise God for His goodness! I experienced a personal turning point when I realized that God is our Great Provider. He knows our needs even before we ask Him.
And my God will meet all your needs according to the riches of his glory in Christ Jesus.
Philippians 4:19
Reflecting on why I relied so heavily on credit cards and loans without consulting God or practicing disciplined living, I now see the error in my ways. Thankfully, through His grace, I’ve gained insight. Today, I want to share a method that helped our family pay off debt fast—the Debt Snowball Method. This approach, which I first learned from financial expert Dave Ramsey, prioritizes paying off debts systematically.
What is The Debt Snowball Method?
The Debt Snowball Method involves listing debts from smallest to largest regardless of interest rates. The goal is to tackle the smallest debt first while making minimum payments on others. Once the smallest debt is cleared, its payment is added to the next smallest debt, creating a snowball effect that accelerates debt repayment. This method not only provides a clear strategy but also fosters a sense of accomplishment as debts are eliminated one by one.
Implementing the Debt Snowball Method requires commitment and discipline. It involves creating a budget, prioritizing expenses, and allocating any extra funds toward debt repayment. Alongside financial diligence, prayer and seeking God’s guidance are crucial aspects of this journey. Trusting in God’s provision and following sound financial principles can lead to financial freedom and peace of mind.
As I share this method with you, my heart is filled with gratitude for God’s faithfulness in our financial journey. May this tool serve as a blessing to you, helping you achieve financial stability and draw closer to God’s abundant blessings.
Why The Debt Snowball Method is the Best?
For our family, the Debt Snowball Method has been transformative, shifting our perspective on debt significantly. Beginning with the smallest debt, each payment fueled our momentum, fostering determination to clear all debts progressively. This approach provided immediate victories, igniting a sense of triumph that spurred us to tackle each subsequent debt with fervor and determination.
While conventional wisdom may advocate prioritizing debts with the highest interest rates, our experience revealed that personal finance is predominantly about behavior rather than pure mathematical calculations. Understanding that 20% is knowledge-based while 80% hinges on behavioral choices, we embraced the importance of gaining swift victories to sustain our motivation and commitment to becoming debt-free.
In the words of financial expert Dave Ramsey, “You need some quick wins in order to stay pumped enough to get out of debt completely.” This encapsulates the essence of our journey with the Debt Snowball Method, as it not only empowered us with a practical strategy but also instilled a winning mindset crucial for achieving financial freedom.
Examples of Debts to Include in The Debt Snowball?
All debts should be included in the debt snowball. Below is the list of examples.
- Personal Loans
- Credit Card Debts
- The money you owe other people
- Student Loans
- Car Loans
- Salary Loans
- Housing Loans
- Medical Bills
- Etc.
How to Start the Debt Snowball?
Debt Snowball is simple. Just follow the steps below.
Step 1. List all your debts from smallest to the largest remaining balance.
Below is an example of the debts we were paying when we started the debt snowball method (so horrifying):
- BDO Car Loan – P 65,000 remaining balance
- BPI Personal Loan – P 85,000 remaining balance
- Citibank Credit Card –P 90,000 remaining balance
- BPI Credit Card (Mine) – P 98,000 remaining balance
- Citibank Personal Loan 1 – P 175,000 remaining balance
- BPI Credit Card (Hubby)- P 167,000 remaining balance
- Citibank Personal Loan 2 – P 395,000 remaining balance
Step 2. Figure out the minimum amount that you need to pay for each debt every month.
Example:
- BDO Car Loan – P 16,000
- BPI Personal Loan – P 5,366.80
- Citibank Credit Card –P 2,000
- BPI Credit Card (Mine) – P 2,000
- Citibank Personal Loan 1 – P 10,865.90
- BPI Credit Card (Hubby)- P 2,000
- Citibank Personal Loan 2 – P 15,982.50
Step 3. Allocate a certain amount of money from your monthly budget to pay off your debt.
In our monthly budget, we allocated P 55,000 to pay our debts. That’s the maximum amount that we can slash from our budget so we can pay our debts and at the same time making sure that all our basic needs are met.
Step 4. Pay off the smallest debt first.
Attack with intensity the debt with the smallest balance first while paying the minimum on larger debts.
Example:
- BDO Car Loan – P 16,000 + P 784.80 (Extra)
- BPI Personal Loan – P 5,366.80
- Citibank Credit Card –P 2,000
- BPI Credit Card (Mine) – P 2,000
- Citibank Personal Loan 1 – P 10,865.90
- BPI Credit Card (Hubby)- P 2,000
- Citibank Personal Loan 2 – P 15,982.50
Step 5. Snowball on the next debt in line.
After paying off the smallest debt, we focused on the next debt on our list. We took the amount we were paying on our BDO Car Loan and put it towards our BPI Personal Loan.
Example:
- BDO Car Loan – paid
- BPI Personal Loan – P 5,366.80 + P 16, 784.80 (Snowball payment)
- Citibank Credit Card –P 2,000
- BPI Credit Card (Mine) – P 2,000
- Citibank Personal Loan 1 – P 10,865.90
- BPI Credit Card (Hubby)- P 2,000
- Citibank Personal Loan 2 – P 15,982.50
After paying off BPI Personal Loan, we attacked Citibank Credit Card next.
Example:
- BDO Car Loan – paid
- BPI Personal Loan – paid
- Citibank Credit Card –P 2,000 + P 22, 151.60 (Snowball payment)
- BPI Credit Card (Mine) – P 2,000
- Citibank Personal Loan 1 – P 10,865.90
- BPI Credit Card (Hubby)- P 2,000
- Citibank Personal Loan 2 – P 15,982.50
We did the same process for the rest of our debts.
During the process of paying off, I keep on telling our debts, “you are all going down, debts, in the Name of Jesus! Though you are big, I have a BIGGER God with me!” As you can see, they obeyed.
Faith and hope play crucial roles in debt repayment. At times, the journey may appear daunting, shrouded in darkness, but these virtues ignite a glimmer of hope, propelling us forward. Trust in God’s faithfulness is very important; He will rescue us from all debts, showing His unwavering love for us even in our shortcomings. Make the firm decision to never return to debt.
Just make that decision that no matter what, you are not going back to being in debt, never again. Rely on God’s strength to sustain us through this journey.
Track Payment Progress with FREE Printable Debt Snowball Payment Tracker
In our journey to debt freedom, we track our progress to keep our energy and motivation up. Sometimes you just need to see how quickly you could become debt-free so you can build that momentum that can help you finish all your debts.
You can use any application or spreadsheets that you like in tracking your progress. You can also get your FREE Printable Debt Snowball Payment Tracker by filling out the form below. Don’t forget to include your email address to where we will send your Free Printables.
If you have a different method of paying off your debt fast, feel free to share it with us by writing in the comment box. I know a lot of people will also learn from your own experience.
With love and blessings,
