{Week 3: Journey to Financial Freedom, The Snowball Effect}

It’s Monday…. the best day of the week (other than Sunday, I love me some Worship Time in the House of God!!!)… so why is it the best day? Come on, if you’ve stuck around with me long enough, you’d know that Mondays are the days when we go deeper into our financial mess in the hopes of seeing our financial house redeemed and put back in order! Isn’t that something to get excited about? Of course it is!!!!



Well, I wish I could say that we could move on now… but reality is that we must stay here in the {Debt Repayment} section just a little while longer. Debt repayment is one of the primary steps in our {Journey towards Financial Freedom}. Why? Because if we don’t learn about debt and debt repayment, we are simply going to continue getting into debt. It’s important to understand debt and to know why you want to repay debt. And let me just say… the reason is NOT to have more money to buy more… although debt repayment can provide you the opportunity to get things you’ve only dreamed of getting.

Let’s go back to the Money Map.

Step 1 was: Save $1000 for emergencies. (I hope you are working on that!!!! Even $5 at a time will make a difference). Remember this is for you and for your family. When an emergency comes up, you want to be responsible enough to have that money put aside… and take it from me, EMERGENCIES DO COME UP!!! We must have had this $1000 put aside so many times only to find ourselves with emergencies and having to start all over. But having the money to pull from is far better than using that credit card. Remember, you will end up paying sometimes 29.99% more for a purchase by using your credit card.

Step 2 on the money map is: Pay off those credit cards and increase saving to one month’s living expenses.

Yep, that’s right…. you made your Debt List and you should know what you owe and to who you owe it to. So it’s time to start paying off those credit cards. Think about it. If you are paying $100 or more a month towards credit card bills, that’s $100 or more that could be going into savings. I know it seems like Debt Free Day is far away, but don’t let that stop you. You can do this.

So let me introduce you to {The Snowball Effect}… doesn’t that sound fun?

I want you to think of a snowball going down a hill. The farther it goes, the bigger it gets and the faster it goes…. blame it on gravity and momentum. Once it starts going, there’s no stopping it.

Now let’s go back to your debt. Look at those credit card bills.


Credit Card A has $1000 at 15.99% interest.

Credit Card B has $2800 at 10% interest.

Credit Card C has $5000 at 29.99% interest.

Some would suggest to pay the credit card with the highest interest first in order to save all the money that is going towards interest on that card. However, let me show you how {The Snowball Effect} works.

Let’s say that you have $100 left over after paying your bills and following your monthly budget. You would then take that $100 and split it, $50 towards your emergency fund and $50 extra towards Credit Card A. (Once you’ve saved up one month’s worth of living expenses, you will then put that $50 towards saving 3 months living expenses). The other $50 would go towards Credit Card A. This will help you to pay Credit Card A off a lot faster!

Once you pay off the $1000 balance on Credit Card A…. you DO NOT take that extra $50 and go buy yourself a pair of shoes. NO! You can use your old shoes for now. Remember, you have a goal in mind. And that goal requires you to sacrifice and to drive that debt down. You would take that extra monthly payment that you used to pay for Credit Card A (let’s say it was $25) and the extra $50 that you were putting towards it…. that’s a total of $75 and you would now pay $75 extra towards Credit Card B.

So if your payment for Credit Card B is $80/ month. You would now be paying $80 + an extra $75 for a total of $155.00. You will pay off this card a lot faster than you would by paying the minimum monthly payment and you will ultimately save so much on interest.

Can you see how {The Snowball Effect} is being used to make your payments towards debt bigger and more impacting? They are making a much greater dent in that debt!!!!

So when Credit Card B is paid off you now take that $155 dollars (in addition to your monthly payment) and you pay it towards Credit Card C.

There you have it… {The Snowball Effect}.

Imagine these credit cards in my illustration were yours. Imagine being able to pay them off and ending up with an extra $300 to $1000 a month which previously went towards credit cards (which by the way…..do you even remember what you purchased with those credit cards? Yeah, neither did I!!!)


We are still working on the same memory verse:

“Just as the rich rule the poor, so the borrower is servant to the lender” (Proverbs 22:7, TLB).

Memorize it and continue to remind yourself why you are doing what you’re doing. Remind yourself of what God desires for your life: FREEDOM!


If you really want to know how much money you are throwing out the window each month in interest only, I encourage you to take a look at {The Credit Card Minimum Payment Interest Calculator}. Play around with the numbers and see how much you’d save by paying a little more than the minimum payment each month.

Then if you want to have even more fun… check out {The Snowball Effect} calculator: Also known as the Accelerated Debt Payoff Calculator. Watch and be amazed as you see a plan for going from Debt to Debt Free!!!

Don’t forget to stop by and let me know how it’s going for you? Are you excited? Are you overwhelmed? Are you on your own journey to {Financial Freedom}? I would love to hear from you!


Posted on October 31, 2011, in BUDGETING, FINANCES, FINANCIAL FREEDOM, LIFE LESSONS and tagged , , , , . Bookmark the permalink. 9 Comments.

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