The Updated Debt Snowball

As I've said before, it's quite awkward to blog about our personal finances. However, we are so excited about what God is doing in that realm of our lives that we can't help but want to share and perhaps, inspire some of you! We have been following Dave Ramsey's 7 steps to financial peace for one full year now. In January of 2009 we had approximately $24,799 in debt.

As of January 1st of 2010 we have $8,676.81 left to pay on my student loans! We have paid off an ambulance bill and Rob's student loans.

That means that in one year we have paid off around $16,123 in debt. Even writing that down it seems impossible. That is an extremely significant chunk of our income. We have a very average income and a very average lifestyle.

How did we do it? Well, by the grace and provision of God, first of all. In addition, we are living cheaper than we have in previous years since we are currently in the condo instead of the house. We sold stuff. We haven't bought anything that wasn't a necessity (except for our trip to Disneyland which was a near fully-funded trip prior to 2009 when we started the 7 steps). We received some money each month that our foster kids were in our care and at the end of each month we took every penny that wasn't spent on their expenses and added it to the snowball too. We used our tax returns for debt instead of fun (like I'm usually tempted to do). We cut our budget as much as we could. We focused our budget. We stopped trying to save money or to invest money and stuck every penny we could muster into our debt snowball. We stuck every penny we got in gifts or bonus's into it too. We began to practice the principle "Every dollar has a name before the month begins". We told our money where to go, it didn't mysteriously disappear. We measured every purchase against the statement, "What do I want more _________ or to be debt free?" The answer was almost always that we wanted to be debt free. It's amazing how many things I didn't buy in 2009 that I normally would have because of that comparison! We didn't pay any credit card fees or late charges because we cut up our credit cards. We adjusted our life in many ways to focus all of our financial effort on one goal: GETTING OUT OF DEBT.

Every time we paid off a debt, or squeezed out some extra money it went right into our snowball. Just as snowballs get bigger when they go down hill and pick up more snow, the amount of money we were putting toward our debt snowball grew and grew and grew each month. Before we knew it we rolled our way out from underneath of our ambulance bill, then Rob's student loans. Now, all of the money we were paying on each of those things is going to pay off my student loans. Next week we will be adding in our raises which will help our snowball grow even faster.

We are $8,676.71 from being in debt for the last time (well, except our house... but there will come a time that we attack that with a vengeance too!). I am $8,676.71 from being enslaved to monthly payments that provide me with nothing but past experiences that have already come and gone. Don't get me wrong, I'm incredibly grateful for our educations, but I look forward with great anticipation to a day when half of my income doesn't go toward the payments for it.

And that my friends, is how two average people managed to be $16,000 closer to the freedom that being debt-free provides in just one year! I hope you consider 2010 as the year that you will begin the baby steps on the road to financial peace. See www.daveramsey.com for more information and inspiration. He doesn't sell anything or offer any magic cures. He simply walks you through the necessary steps of taking control of your finances one small little baby step at a time. Good luck!