debt snowball

Our Story of Empowerment with the Debt Snowball

debt snowball

As most of you know I believe that clutter comes in ALL shapes and sizes and that being organized is a lifestyle not a destination.  I don’t just preach, I practice what I preach and I am always researching and educating myself on ways to do it better not only for myself but to teach others.

A few years back, while I was writing my book Organize Now! your money, business and career, I did a lot of research about different ways to budget, pay off debt, save money etc.  At the time my husband and I were following the Transforming Debt Into Wealth Program designed by John Cummuta.  I will say it is a great program and it really helped us save a huge down payment for the house we built.  John’s program taught us the power of the debt snowball.  Many of you know how this works but for those who don’t you basically pay off your debt from smallest to largest.  Once you pay off your smallest debt you start applying that monthly payment to your second debt.  For example: If you are paying $100 per month toward a credit card….once you pay off that credit card you would put $100 extra toward your next debt (say a car payment).  The payments basically grow larger and larger (like a snowball) until everything is paid off! Can you imagine how awesome you will feel on that day?!!!

Then last year I started listening to Dave Ramsey’s radio show on my way home from work.  I really got into it because Dave is a Christian and teaches from this perspective.  As an organizer, I especially love when he encourages his listeners to sell what they aren’t using and put this money toward their debt.  YES! I always think…. I totally love this guy!

I started applying what Dave calls the “Baby Steps” to our life:

Baby Step #1

Put $1,000 in an emergency fund.

Baby Step #2

Pay off all debt using the debt snowball.

Baby Step #3

Save 3-6 months living expenses.

Baby Step #4

Invest 15% of your household income into Roth IRAs and pre-tax retirement.

Baby Step #5

Start saving for your children’s college education.

Baby Step #6

Pay off your home mortgage.

Baby Step #7

Build your wealth and give! Continue to invest in mutual funds and real estate.

I had been listening to Dave’s show for about a year and had told a few friends about it.  One day my good friend, Jessi, said let’s order the Financial Peace University course.  This course is offered at my church (and hundreds of churches around the country) but we just didn’t have time in our schedule to commit to a weekly class at night.  Jessi and I also own a business together so we figured this was valuable for both our professional and personal lives.  It would also be fun to have the extra accountability from each other.  Plus, we really wanted to get both of our husbands on board (they were getting way too comfortable letting us do all of the number crunching)!

Well, my husband and I have been watching the DVDs from the course together for about 4 months and applying the principals to our lifestyle.  I will say that we both felt like we were pretty darn smart with our money before but I can not tell you how much MORE we have learned in just a short time!

Here are some of the major changes we have made:

* We not only paid off our one credit card but we cut it up in a million pieces AND canceled it forever!  FPU taught us that the so called “reward points” you earn off that piece of plastic are just not worth it.  I have had that same card for about 15 years and let me tell you it was a little scary for us to let go of that huge credit limit! But with Baby Step #3 completed we learned that WE should be able to cover an emergency, not the card.

* We implemented Dave’s Cash Envelope System.  What is this? Just like it sounds…you literally budget out your spending money each money with cash.  We are always good about using cash but what we have learned is to sit down together and plan out where our money goes each month….very empowering!  Important note: when the cash is gone you are done!

Here is the system my friend Jessi set up:

debt snowballdebt snowball

She loves it because it fits in her purse.  I am using Dave’s envelopes. Both work great!

* We dropped our mortgage from a 30 year loan to a 15 year loan….this saved us $88,000 in interest!

*  We shopped for new rates on our auto and home owner’s insurance and saved over $700/per year by switching!

* We switched to a new financial advisor, who is personally endorsed by Dave, and that believes in the same system we believe in and that can keep us accountable to it.

One of the most exciting things that I have noticed in this process is the grace we have encountered.  The more responsible we are with our money the more it seems to come our way.  My belief is that we are to be good stewards with what God gives us and when He sees that are can handle the precious gifts he sends our way…he gives us more.  I am in awe of His grace and truly grateful.

This journey has been amazing so far.  My husband and I communicate more than ever about our finances and our future.  We get excited about what we are doing and where we are going.  The best part is that we are working as a team.

I am sure there are many more fantastic ways to organize your finances and meet your goals but I thought I would share this post with you because this one works for us.  I love how this system forces you to focus on your goals one baby step at a time (just the way I teach organizing anything in your life)!  Plus, I always love a good plan!

I can not encourage you enough to apply these systems and the debt snowball to your life.  Just by taking control of your clutter (which in this case is debt) you will feel empowered more than you ever have before!! The younger you are when you begin, the more exciting your journey will be.  SO START TODAY!

** I have an organized a spreadsheet that works great if you are following the Baby Steps program.  I have also included a budget sheet and some tips on how you can find more money to put toward debt.  You can purchase your own copy of my Debt Reduction Worksheets for only $3.00!

Debt Reduction Worksheet

* This post is not a product review.  I am in no way being compensated by Dave Ramsey or his company.

Jennifer Ford Berry

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Hi there! I am Jennifer Ford Berry or some people like to call me "Life's Organization Expert". I am super passionate about helping people get organized and stay that way! I have written a series of books called Organize Now! I contribute my organizing tips to National magazines, radio and TV shows. I am here to help you realize that your life is not about stuff...it is about living! YOU can live an organized, healthy and exciting life one baby step at a time. Let me show you how!

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