Get Creditors Off Your Back (and Out of Your Pocket) with the Debt Snowball

Updated: Feb 23, 2019

Creditors suck!

Okay, I'm sorry. Many creditors are decent human beings just trying to make a living like the rest of us, but when they're calling all hours of the day to get us to pay them money that we don't have at the moment, they really, really suck.

So, Tiana, how do we get them off our back?

Don't worry, I'm about to answer that question!

In the Dreamers Financial Playbook podcast, we're dropping a two part mini-series starting this Wednesday called "Stop Dodging Your Creditors." This series is going to walk you through a step-by-step plan to start proactively working with your creditors in a way that shuts down those embarrassing collection calls and makes it safe to answer your cell phone again!

This mini-series is exactly why we're here, on a random Sunday, talking about one of my favorite financial strategies for destroying debt: The Debt Snowball.

Why do I like this strategy? Because it works... when you use it right!

The debt snowball is really designed for people who are:

  1. Sick and tired of being in debt,

  2. Committed to not creating more debt, and

  3. Able to at least make the minimum payments on all of their debts.

If you can raise your hand and say "Yes" to all three of those criteria, the debt snowball is a powerful tool for paying back your creditors so that they stop all of the freaking calls!

Which brings me to what's below the line in this blog post, something you've probably been curious about since I never use horizontal lines in my posts.

Part of the step-by-step plan for stopping those pesky collection calls includes creating a plan for how you will pay off your debt. The problem is that if I had walked through the debt snowball in detail, the episode would have gotten a lot longer.

For that reason, I've decided to walk you through the process of creating a debt snowball here, in this lovely blog post that you can refer to over and over and over again.

Do you like how easy I made this for you?

This special Debt Snowball walkthrough comes from Chapter 3 of my book, That Tool Called Money, where I introduce you to my DREAM-PLAN-DO Strategy for using money as a tool to demolish debt, protect your family and build a life that you absolutely love! You can grab a copy of the book to uncover the rest of the Dream-Plan-Do Strategy so that you can build a life of freedom, security and choice by going to

Now back to paying off debt with The Debt Snowball.


Once we have our protections in place for the family, it’s time to tackle the first big task: paying off debt.

In my mind, I can practically hear the groaning as you read this. Paying off debt is not fun, it is not sexy, and it forces you to once again come face to face with the reality of those financial decisions you made and now probably regret. I hear you! My husband and I went through the same thing when we were faced with the reality of how much debt we had amassed. It was certainly a very hard pill to swallow, but now, after having paid off tens of thousands of dollars in debt, we are living proof that you CAN do it and that you certainly SHOULD.

If that’s not enough, go back to Chapter 1 where we helped you to Understand the Risk of Debt. When you think about how your debt is eating away at your monthly income, it seems like a no-brainer to get rid of those debts so that you can put the monthly payments back into your pocket! Imagine how much you could accomplish, the type of life that you could build if you were no longer paying that $600, that $1,100, that $2,000 a month to companies and could give it back to yourself!

To tackle this debt, we’re going to employ what is commonly referred to as The Debt Snowball. The general premise is that you make minimum monthly payments on all of your debts except the debt with the smallest balance. This debt you attack with as much discretionary income as you can throw at it above and beyond the minimum monthly payment. Once you have knocked out that debt, move on to the second debt, taking the payments from the first debt with you to the next. You’re going to do this over and over and over again until you have knocked out every debt on your list.

To get started, we’re going to pull that list of liabilities from your net worth calculation. If you have any mortgages on the list, you can exclude those because we’ll tackle those later. You’re going to take these non-mortgage debts and put each one in order from the smallest balance to the largest. Then we’re going to write next to each debt and each balance the amount of the minimum monthly payment.

It’s going to look something like this:

Notice that we added a fourth column, called the Snowball Payment. This column shows how much you’re actually going to be paying towards each debt when it has reached the top of the list. In this scenario, the family was able to find an additional $275 to throw at their smallest debt, the local store credit card. Once that card was paid off, that $300 they paid on the local store credit card was added to the personal family loan for a payment of $395 a month. After about three months, the personal family loan would be gone and the car note would be next. And down the line you would go

Simple, right?

Before we move on to the next step, let me answer a burning question that some people like to ask: Why aren’t we attacking the debt with the highest interest rate first?

Let’s go back to our example. More than likely, the two credit cards have the highest interest rates as the typical interest rate for a credit card is anywhere from 16% to more than 24%. The personal family loan, depending on how generous your family is, probably has no interest. So surely you want to hold off on the personal family loan and attack those credit cards first!

That may sound like a smart plan, but in reality, it overlooks one of the most important elements of your success: momentum.

For many families, the list of debts has a wide range, with some balances in the low hundreds and other balances in the thousands and tens of thousands. If you attack a debt with a high interest rate first that also has a high balance, you cause your momentum to grind down to a halt. In fact, if our imaginary family here paid off the Big Bank Credit Card as their second item, it would take 29 months! That’s over 2 years working on a single debt! How demoralized and unmotivated would you be if you spent two years working on a single debt at the very beginning of your plan?

When you attack the smaller balances first, you get some quick wins under your belt fast that help you keep going! When using the debt snowball for our imaginary family, no one debt is going to take longer than 12 months to pay off. In fact, the first 3 debts on the list will be gone in the first 11 months of the debt snowball! If you could get three creditors off of your back in the first year of tackling the plan, wouldn’t you do it?

I would! Frankly, I did! In our first year, my husband and I eliminated 7 debts from our list! Let’s just say that it was a really exciting holiday season that year!

So follow the debt snowball. No fancy shenanigans or complicated algorithms. This is just a straight-forward plan to destroy one debt at a time faster and faster with each round.

And there you have it, The Debt Snowball with visuals and all!

The plan may seem really simple, but it truly is powerful. Every time my husband and I paid off a debt, we got more motivated to demolish the next one. Next thing you know, over $33,000 of debt was gone in a single year and we were able to buy a new house to accommodate our family of six that had outgrown our 3-bedroom house!

I am a living example of the power of The Debt snowball and you can be too!

Now, you may have noticed that we referred to some other steps in the process, such as doing a net worth calculation. To learn more about what we did there, order your copy of that Tool Called Money today so I can get it in your hands ASAP!

In the meantime, join us this Wednesday, September 19th when part one of "Stop Dodging Your Creditors" drops on the Dreamers Financial Playbook podcast. If creditors are calling your phone, this is an series that you absolutely do not want to miss!

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