Pay Off All Debt (Except the House) Using the Debt Snowball Lesson 2
You’ve got $1,000 in the bank, and you’re ready for Baby Step 2: paying off all your debt except your house using the debt snowball! Attack the smallest debt first while making minimum payments on the others. Once you pay off the first one, you’ll move to the next smallest debt, taking your freed-up money, newfound motivation and momentum with you—until you pay off the last, largest debt!
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Action Items
Cut up your credit cards
If you didn’t do it as part of the Activity, gather the family, grab scissors, and host a plasectomy party! This is when you decide to stop the crazy cycle of debt—so celebrate! Just remember that you’ll also need to call each credit card company and close the accounts once and for all.
Fill out your debt snowball
If you have any non-mortgage debts, list them in your debt snowball in Ramsey+. We’ll help you sort your debts from smallest to largest so you can start attacking the first one right away. Make sure you track your payoff progress in Ramsey+ so you always know how close you are to your debt-free date! Don’t have any debt? Head to the next Action Step!
Get Gazelle Intense
If you’re in Baby Step 1, 2 or 3, it’s time to get intense—this is a "whatever it takes" mentality! That means you pause investing, sell the second TV, ban restaurants, and work overtime. A couple years of intense sacrifice is worth a lifetime of freedom.
Track your transactions in EveryDollar
Actually using your budget is the only way it will work for you! Stay on budget by tracking your transactions and dragging them into the right categories. That’s how you’ll see exactly how much you’ve spent in each category you budgeted for! Pro tip: Connect your bank to EveryDollar so your transactions show up in your budget automatically.
Read "The Debt Snowball" on Page 42 of your workbook FPU Workbook
Need a reminder on how the debt snowball works? Check out how this method is the fastest way to get rid of debt!