Building a More Lethal Snowball

by Lindy on May 21, 2012

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Last fall I was feeling blue. Blue about budgets, that is. I’m sure you can relate.

I was blue after accomplishing my Great Annual Budget Recalibration and discovering our debt reduction fund, or the amount left over after all expenses were accounted for, had shrunken to a pitiful amount.

Even though we’d paid off $11,000 in credit card debt and eliminated nearly $400 in monthly minimum payments, our budget for paying off debt, or our “debt snowball,” as it’s wont to be called, was teeny-tiny.

The economy had eaten it.

Pay cuts, rising gas and grocery costs, rising health insurance premiums…you know the drill. There was no rolling that $400 into our other debts, like the true debt snowball method suggests. Instead, it was like we were starting at the beginning all over again. Facing a mountain of debt, with little money to throw at it.

Hence, the blues.

But in the end we had no choice but to keep moving forward. And now that we’re 8 months down the road, I’m actually thankful for our shrunken funds.

That phrase felt really weird to type. But it’s true.

In a way, it was sort of like a reset button.

It forced us to live on less and eliminate frittering purchases. 

It also forced us to find other ways to increase the size of our snowball, little by little.

For instance, after I wrote this epic post in February hypothesizing some extreme and potentially painful actions we could take to pay off debt (e.g., renting out our house), husband Adam decided it would be slightly less extreme to give up his afternoon coffee habit.

Once he made that commitment (and overcame the resulting caffeine withdrawal), I immediately increased our monthly transfer to our so-called “Debt Account” by $40.

Then in March we had the swapping of the car loans, which saved us $200 per month. The day after signing the papers, I logged in to my bank account and increased our transfer by the same amount..

Since my new car is more fuel efficient, I’m saving $50 per month in gas. Guess what? I’ve added that amount to the monthly transfer too.

When Baby Rock finally decided to become potty trained a few weeks ago, not only was our sanity restored, but also $25 in diaper expenses was restored to our monthly budget. Snowball became $25 heavier.

So little by little, as funds have been opening up to us, I’ve scooped them into the automatic transfer to be used for our debt repayment.

This month, thanks to an economy that’s showing signs of recovery (knocking on wood and crossing all fingers and toes), my pay was fully restored. So my paychecks are back up to where they were last fall.

You can probably guess where that extra money is going now.

Have you had to build a bigger snowball? How did you do it? 

Photo by kamshots

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  • My wife and I are currently looking to downsize and more closer to our works so that we can save some extra money (and it will allow us to get on a 15-year mortgage).

    We bought this house a few years ago when I was making great money, however, after I decided to take a pay cut, it definitely got a little out of our price range.

    • Lindy

      Downsizing is a bold move, but one I’m sure will pay off for you. Best of luck!

  • You bring an excellent point I had not considered. Sometimes snowballs DO get eaten away by things we have no control over (like pricier gas, increased taxes, less income/less variable income), and we don’t think about it. I definitely need to adjust my long term plans to reflect any such changes. Thanks for the article!

    • Lindy

      The good news, is that circumstances can also make them get bigger. :)

  • Yea Lindy! Glad to hear that you found ways to increase your snowball account :) Keep up the good work!

    Oh, I am completely envious that you got Baby Rock potty trained. Can’t wait for the day when I can say that :)

    • Lindy

      The potty training was a long time coming. It’s definitely a welcome change.

  • Sometimes, unintentionally, I do this in reverse. This month, I accidentally added another payment to my student loan. So now I have to live on $500 less than I expected, and for now? It’s painful enough so that I don’t want to do it again, but it’s been helpful, too.

    • Lindy

      Haha. “Accidental payments,” eh? I think they call that passive aggressive budgeting. ;)

  • Thanks for the reminder to actually increase your auto savings/payments as you decrease your over head. We don’t have any non-mortgage debt, but post-refinance and car pay-off, I need to put that money away. If you leave money ‘sitting around’ for any length of time, its bound to get eaten. Just like cookies…

    • Lindy

      Oh yes, they will get eaten.

  • That’s awesome! Way to wrestle forward movement out of the jaws of inflation!

    Right now we’re trying to deal with increased costs (pregnancy, new baby, private school, not being able to eat wheat…) and decreased real income… I keep going back and forth about whether to cut spending or to cut saving. It’s not an easy decision.

    • Lindy

      Cutting back is never an easy decision. I guess I’d go with the one that causes the least pain at this time in your life. Would it pain you more to not contribute to savings, or to give up on some little luxuries?

    • I have no idea. And the real question is how much will it hurt when DH doesn’t have a job anymore if we don’t cut back now… And how temporary is the increased baby spending?

      These things would be easier if I’d been getting raises or we were independently wealthy!

  • I really like how you directly put those savings towards your debt snowball. You don’t need to be paying off an extra loan or credit card to increase the power of your snowball. The thing with paying of debts is that it becomes tempting to let your saving habits slip a little bit when you think you have that extra wiggle room.

    • Lindy

      That’s why we snatch up any wiggle room as soon as it hits our account. We know ourselves and our sliding habits too well.

  • I usually start by putting all gifts (no matter size or frequency) into my debt snowball for that month, and try to keep habits like eating out down to a minimum. I made a challenge not to buy meat for the rest of the summer, and that savings went into the snowball for a while, but for now has been consumed by house purchases.

    • Lindy

      Gifts! That’s hardcore. ;) I always spend mine.

  • It’s good to hear that things are looking up! I’m so jealous that yours is out of diapers….I can’t wait for the day to come..

  • The part about potty training jumped out to me, because we are in the midst of PT our 2.5 yr old son, and last night it must have totally “clicked” because he used his potty all night for #1 and #2!! Could you just imagine the $ signs in my eyes from the money we will save in having to soon get rid of diapers?!!!! Yahooooo! Lol

    Thrift Diving

  • Glad to hear your pay will return to what it was. We’re planning on renting out a room to make up some of our shortfall so we can kill debt faster. We’ve talked about downsizing, but we’re not quite prepared to make that big of a move yet – we love our house.

  • We just made room for some snowball cash, but we also will be welcoming our first baby in a few weeks. I know expenses will be higher, so I intend to wait a little while to see exactly how expensive this little bundle will be before I decide on an exact smowball amount. Your auto transfer is a great idea — we’ll have to steal this when the snowball amount decision is finalized!

  • One of the best takeaways from this is that you re-calibrated when circumstances changes–you DIDN’T stick your head in the sand or allow fear/helplessness/dismay dictate your next course of action. Kudos to you; keep up the great work!

  • This is what I need to do; automatically transfer my monthly “savings” on small items to my savings account. I too have reduced my coffee habit and now make my own coffee *gulp* which is saving me about $40 a month. If I don’t see it, I won’t spend it!

  • We had about $52,000 in debt and we didn’t have much surplus to roll into our debt snowball. And then something snapped in my head. I want to be DEBT-FREE. We sold my brand new car for $16k (which we owed $17k on) and then went through each line of our budget and said, ‘how can I make this number smaller?’ We were able to free up over $600 per month to start just by doing that. Oh yeah, and we were able to pay it off in about 18 months :)

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