“Use it up, wear it out, make it do, or do without!” “Pay as you go.” What a contrast these ideas are to the way some live today! The worst of our culture today is fad and fashion-driven and life with debt is expected, encouraged and even rewarded. However, we are commanded to be in the world, but not of the world and, specifically, we have been taught “be modest in your expenditures; discipline yourselves in your purchases to avoid debt to the extent possible. Pay off debt as quickly as you can, and free yourselves from bondage.” (Gordon B. Hinckley) One approach that has helped many become free of debt is the Debt Snowball. Here is how to create your own:
- List all current debts. Include information such as interest rate, minimum monthly payment and total payoff.
- Now organize your debts from smallest total payoff to the largest. If you have two debts in nearly equal amounts, list the one with the higher interest rate ahead of the other.
- Review your budget and determine whether you have any additional money you could put toward debt repayment. Add this amount to your next monthly payment on debt #1. If your budget does not allow a larger payment, do not despair, it soon will!
- Make payments on debt #1 until it is paid off.
- The following month, apply all the money you had been paying toward debt #1 to debt #2.
- Make payments on debt #2 until it is paid off.
- Repeat until all debt is eliminated.
This approach enables one to progress quickly as the smaller debts are eliminated, and resources are freed up to handle larger debts. The gathering momentum is encouraging and makes it easier to stick with the program and become completely debt-free. You can read more in the July 2012 Ensign “Getting Out of Debt—for Good”, Luke V. Erickson.“Wherefore, be not weary in well-doing, for ye are laying the foundation of a great work. And out of small things proceedeth that which is great.” D&C 64:33
Note: If you are an Excel user, you can download free Debt Snowball spreadsheets at download.com (search “debt reduction calculator”) and at treesfullofmoney.com (click on “debt snowball calculator”). These will enable you to input your debt information and see all your payoff dates at a glance. Be sure to download cautiously. Use your anti-virus software to scan links, find and read reviews on products and read all contracts and agreements thoroughly.