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My favorite Debt Snowball Tool: Undebt It

While googling my favorite topic, #gettingoutofdebt , I stumbled upon a GREAT, easy to use tool. Enter Undebt It.

Website: https://undebt.it/

Not only does this site offer a ton of useful debt payoff method tools, there is great advice and explanations of all the tools. This guy gets it!!!!!!!! I wanted to share the Undebt It description of a Debt Snow Ball, which in my opinion makes the process slightly more crystal clear then Dave Ramsey (no offense Dave, you rock):

The Undebt It Snowball Explanation

A person has the following amounts of debt and additional funds available to pay debt (the debt is listed with the smallest balance first, as recommended by the method):


Credit Card A - $250 balance - $25/month minimum
Credit Card B - $500 balance - $26/month minimum
Car Payment - $2500 balance - $150/month minimum
Loan - $5000 balance - $200/month minimum

The person has an additional $100/month which can be devoted to repayment of debt
Note that interest rate is not factored in the debt snowball method, only the balance. Under the debt snowball method, payments for the first two months would be made to debtors as follows:

Credit Card A - $125 ($25/month minimum + $100 additional available)
Credit Card B - $26/month minimum
Car Payment - $150/month minimum
Loan - $200/month minimum

After two months (presuming the person has not added to the balances, which would defeat the purpose of debt reduction), Credit Card A would have been paid in full, and the remaining balances as follows:

Credit Card B - $448
Car Payment - $2200
Loan - $4600

The person would then take the $125 previously used to pay off Credit Card A and apply it as additional payment to the Credit Card B balance, which would make payments for the next three months as follows:

Credit Card B - $151 ($26/month minimum + $125 additional available)
Car Payment - $150/month minimum
Loan - $200/month minimum

After three months Credit Card B would be paid in full (the final payment would be $146), and the remaining balances would be as follows:

Car Payment - $1750
Loan - $4000

The person would then take the $151 previously used to pay off Credit Card B and apply it as additional payment to the car loan balance, which would make payments as follows:

Car Payment - $301 ($150/month minimum + $151 additional available)
Loan - $200/month minimum

It would take six months to pay the car loan (the final payment being $240), whereupon the person would then make payments of $501/month toward the loan (which would have a $2800 balance) for six months (with the last payment at $234). Thus in 17 months the person has repaid four loans, with two of them being paid in a mere five months and three within one year. (example from Wikipedia)

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