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Build a bigger, badder debt snowball

Pay cuts, higher health insurance premiums, and the rising cost of essentials like food had taken a big bite out of our efforts to pay off debt.

By MSN Money Partner Jun 28, 2012 9:38AM

This guest post comes from Lindy at Minting Nickels.


Image: Home Budget (© Christine Balderas/Photodisc/Getty Images)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 that our debt reduction fund, or the amount left over after all expenses were accounted for, had shrunk 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 eight 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. (Post continues below.)

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), my husband 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 into 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 on 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?


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