The Debt Snowball Method to Pay Down Debt


FinancialCop Nick Daugherty

When the Forbes 400—the 400 richest people in America—were asked what is the most important key to building wealth? 75% said becoming and staying debt-free was the number one key to wealth building. What do the rich know and practice that the rest of us don’t? Being free from debt!

How do you attack your debt with the intensity it takes to accomplish this goal? The Debt Snowball Method.

The Debt Snowball Method

As Dave Ramsey says, “Personal finance is 80% behavior and only 20% head knowledge.”  We need to see the wins and celebrate the victories along the journey to keep us motivated.

First, it can be extremely difficult to make progress on eliminating your debt if you are still using debt each month. It’s one step forward and two steps back. To be successful in the Debt Snowball Method, you must stop using all forms of consumer debt immediately! No more credit cards, no more buying a car, no more anything consumer debt related.

Here’s how the Debt Snowball Method works:

  1. List all of your consumer debts out from smallest to largest. Focus on balance rather than the interest rate.
  2. Make your minimum payments on every debt, except the smallest. Pay as much of that debt as you can. Sell some stuff, work some overtime, do whatever it takes to throw every extra dollar at this debt.
  3. Keep doing that until you’ve paid off that smallest debt. Then stand back and think about the victory you just accomplished. You just eliminated a debt and now the snowball gets fun.

Eliminate Debt from Smallest to Largest

Take that saved monthly minimum from the smallest debt and roll that into the next smallest debt.  You see where this is going? Throw every extra dollar at that debt until it is eliminated. Now roll the minimum payment from the first and the second debt. That’s how a snowball happens. It gets bigger as it rolls downhill.  Do this over, and over again until you have paid off everything.

Tip: Print out your debt list so you see it every day to keep yourself motivated and mark off those smallest debts as you pay them off to show your progress.

It’s about the personal wins; the victories of marking out a debt and never going back to that place again. This is how you start to really win with money.

Do Millionaires Have It Right?

In 2018, Chris Hogan conducted the largest study on American millionaires in 25 years. Chris and his team surveyed over 10,000 millionaires and learned:

  • 94% of millionaires live on less than they make.
  • 79% were self-made, not born into it.
  • When it came to debt, 73% never had a penny of credit card debt.
  • 82% have ZERO car debt (they pay cash for cars by saving for them).

Being free from debt is one of the fastest ways to secure your financial future. You deserve to be debt-free.

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The information given herein is taken from sources that IFP Advisors, LLC, dba Independent Financial Partners (IFP), IFP Securities LLC, dba Independent Financial Partners (IFP), and it advisors believe to be reliable, but it is not guaranteed by us as to accuracy or completeness. This is for informational purposes only and in no event should be construed as an offer to sell or solicitation of an offer to buy any securities or products. Please consult your tax and/or legal advisor before implementing any tax and/or legal related strategies mentioned in this publication as IFP does not provide tax and/or legal advice. Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation, or needs of individual investors. Investment advice offered through IFP Advisors, LLC, d/b/a Independent Financial Partners (IFP), a Registered Investment Adviser.  IFP and Serve & Protect Financial Texas are not affiliated.

About Nick Daugherty

Nick Daugherty began his career with the Grand Prairie Police Department (GPPD) in 2003 serving as a patrol officer, school resource officer, and underage alcohol and drug task force officer. In 2012 he was promoted to the rank of Sergeant where he served as a patrol sergeant, field training supervisor, fleet coordinator, criminal intelligence unit sergeant. Additionally, Nick holds a Master Peace Officer certification and a TCOLE instructor’s certificate. He semi-retired in August of 2017 and continues to serve as a reserve officer for GPPD. During his career he was awarded numerous honors and accommodations, including a lifesaving award, as well as being named officer of the month 4 times, Jim Thorne Officer of the year 2 times, and Sgt. Gregory Hunter supervisor of the year award.

Nick is also the president, and owner of Serve & Protect Financial Texas, a full-service financial firm for first responders, run by first responders (CRD#6697256) as well as being a licensed life insurance agent. Additionally, he has completed classes through Ken Zahn’s Certified Financial Planning professional education program.

Nick also serves in various volunteer capacities nationally including the nonprofit as an “A-Team” member as a financial wellness coordinator and crisis coach along with serving on the Texas Police Chief Association Officer Suicide Committee, focusing on the financial wellness impact in regards to officer suicide / PTSD.