Why we stopped our debt snowball

debt snowballThe debt snowball is a powerful way to pay off your debts fast! It’s motivating to pay off your smallest debt and then roll that payment into paying off your next smallest debt. As debt after debt gets paid off, the debt snowball gets larger and picks up more speed to pay off your big debts.

Click here to use our debt snowball calculator

Over the last 30 months, we’ve been able to pay off over $40,000 of debts, including medical debts, credit cards, a car loan, and a student loan! We only have about $12,000 left until we are finally debt free! (applause)

But we’ve stopped our debt snowball. We’re no longer paying off our debts fast. And we stopped on purpose.

Why? Is it because we love our debt and want to keep it around and keep feeding it?

No. We stopped our debt snowball for two reasons:

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Savings Goal Calculator

Savings Goal CalculatorSavings Goal Calculator

Don’t buy stuff you cannot afford! Instead, save up and pay for it with money you actually have! Use this Savings Goal Calculator to help you figure out how much you need to be putting away every month to save for that dream vacation, car, mortgage down payment, dinette set, appliance, or computer.

Your vacations are much more relaxing when you know you’ve payed for them with money you actually have. Your car drives better when you know it’s actually yours. If you’re paying on credit, you risk losing your new dinette set when you can’t keep up with the payments. Save up and pay up with money you actually have. It will give you a sense of freedom and financial wholeness!

Go to the Savings Goal Calculator

Check out our growing list of financial calculators

June’s spending plan almost broke our brains.

Each month’s spending plan is unique. This month’s spending plan is VERY unique!

During the school year, our plan can (more or less) stay about the same. Our general planning model is this: pay all of our necessary expenses, plan a few discretionary expenses, and anything left over gets dumped on old debt.

For instance, we’re about done paying off a 13.99% APR Discover Credit Card that we haven’t used now in two years. The Discover payment is $145 per month. But the new interest they charge us every month is about $90, so only $55 is actually going to pay off the debt. If we kept paying only the minimum payment, we’d be paying on that debt for another TEN YEARS!

Now that Kendra’s done paying tuition on her cash-flowed master’s program (W00T!), we’ve been planning $1,500 per month to pay off the Discover Card. That will pay it off in 4 months.

You can use our debt payoff goal calculator to see how fast you can pay off a debt.

That's my boy!But our 10-year-old, Nathaniel, has just qualified for USA Gymnastics TNT National Championships in July (I’m so proud!).

But where are we going to get the money?! Truthfully, we haven’t been saving a bunch of money on the off-chance he might qualify. We didn’t plan for him to have to fly to Texas and stay in a convention hotel for five days and pay the additional registration and coaching fees.

So in this month’s spending plan, we’ll be paying just the minimum toward our old credit card debt so we can save up enough to send Nathaniel to Texas in July. This means that we’ll stay in debt at least one extra month. And that’s not something we take lightly. But it reflects our priorities and our thoughts about opportunity costs.

We also had to increase medical expenses in this month’s spending plan because of an upcoming doctor’s appointment.

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Car Loan Calculators

car-made-of-moneyThis week’s calculators are all about car loans.

Financially speaking, it’s much better to save up your money and buy a slightly used car for cash. You’ll get a better deal on the car, you won’t lose as much every month to depreciation, and you won’t have debt hanging over your head and keeping you from what you really want to do with your money.

That said, the second largest expense most people have over their working lives is transportation (the first is housing). And a lot of people take out loans to buy cars. So if you’re going to go into debt over a car, you should at least be wise and informed about it.

To that end, here are some useful car loan calculators:

Car Affordability Calculator

Use this calculator to see how much car you can afford if you decide to take a car loan. Obviously, you need to use this in conjunction with your spending plan.

Car Loan Repayment Calculator

Use the calculator to compute the monthly payment on a car loan at a given amount, interest rate, and term.

Car Payment Comparison Calculator

Use this calculator to compare monthly payments given the six most popular car loan lengths.

P.S. Car loan rates are currently at an all-time low.

See our growing list of financial calculators here.


Step 6. Make a realistic spending plan

We try not to use the “B” word around my house. “Budget” sounds like a grey cinder block prison meant to keep you from living life the way you want to. “Budget” food sounds like it might taste bland and gritty somehow. I imagine a “budget” vacation in a roachy motel with a broken pool. Nobody wants to be on a budget! And even if they’re convinced they NEED to be on a budget, nobody wants to stay on a budget!

Spending Plan, budget
A screen shot of a small part of my spending plan. As you can see, we’re still paying off debt.

That’s why we don’t budget. We make a spending plan.

Before the money comes in at the beginning of the month, we have a plan for where all of that money is going to go.

In Step 3, you dreamed with your spouse the kind of life you’d like to live and some goals you’d like to reach at different time horizons. Now is the time when you make a plan to spend your money toward those goals.

With a spending plan, you and your spouse get to dream about next month and decide how you want to spend your money. There will be some expenses that are fixed (housing, utilities, certain bills, student loans, credit card payments, a certain level of food…), but beyond that, you get to decide where your money is going to go.

If you don’t have your baby emergency fund (Step 4) in place yet, you’ll want to put money toward that.

If you have a baby emergency fund and have significant debts to pay off, you’ll want to be sure your spending plan reflects the goal of paying those off quickly (Step 7).

But together, you get to decide where your money is going to go.

When Kendra and I did our first written spending plan, we freaked out.

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