Money Makeover: This Couple Paid Off Over $10,000 in a Year Using Dave Ramsey’s Snowball Method

Money Makeover - Dave RamseyWith a new year upon us, its time to put financial resolutions to the test in the coming months. Throughout the month of January, Go Banking Rates is launching a weekly “Money Makeover series that profiles individuals who have successfully made big financial leaps in 2012 to start off 2013 on the right track.

The first installment of the series shares how one couple tackled a seemingly insurmountable debt in the pursuit of love. For Aaron Marion and Kristen Barrett, a Phoenix, Ariz. couple working in the PR and marketing industry, their obstacle was over $10,000 in debt under Aaron’s name, which was the roadblock that kept their relationship from moving on to the next step.

With the help of the Dave Ramsey debt snowball method — and an ultimatum from Kristen — Aaron paid off his debts and earned Kristen’s hand in marriage. We spoke with Aaron to learn how he did it.

Go Banking Rates: How did you accumulate over $10,000 in debt?

Aaron: Most of my debt was from my previous marriage. I did about $8,000 worth of balance transfers with my ex-wife’s credit cards when I was married. Unfortunately, when we got divorced, the judge didn’t enforce her reimbursing me.

What was the turning point for you?

It seemed as though when making a $300+ payment to a single credit card, most of it was going toward interest. It was very frustrating to not see much more than a dent being made to my debt. After watching some of David Ramsey’s debt relief strategies, I just put my foot down and followed the “snowball effect” to the T.

Why was getting married debt-free so important?

That part was simple — my Kristen made it VERY clear that she would not marry my debt, so if I wanted to spend the rest of my life with her, I needed to clear that debt up — and fast.

What debt reduction strategies have you tried in the past? How did they help, or not help, you reach your financial goal?

I always thought that paying more than your minimum payment would be the way to pay off my debt, but when one credit card alone has a balance of $9,500, that method just won’t work. I also spoke with consumer credit counseling places, but the ways they offered to assist seemed like trading one problem in for another.

The only method that worked was the Debt Snowball, which is basically making the minimum payment to your largest creditors and significant payments to your smallest creditors, allowing you to pay off your debt. As each creditor (from small to big) is paid off, you roll those payments you would have been making into your next creditor.

How did you learn about Dave Ramsey, and why did you choose to pursue the debt snowball as a solution to your debt challenge?

My future mother-in-law has a DVD set of his, and she invited us over for a weekly dinner and “financial peace” to watch each episode until we reached the end. I was, of course, skeptical (and bitter) — everything I had tried just wasn’t working, so why would this work?

I started off doing exactly what David said, and first paid off a $500 Target VISA Card. Next was a $1,800 American Express Card, after that was a $2,500 Chase VISA card and lastly was my $9,500 Chase MasterCard.

Once I got midway into paying off my AMEX card, that’s when I realized that this method was working like a charm!

What was the most unexpected thing you experienced while on this money makeover?

I was pleasantly surprised that not only was I paying off my debt faster than ever, but I didn’t feel financially strapped like I thought I would.

What was the biggest challenge you and your fiancée faced during the debt snowball, and how did you overcome it?

It was challenging to have restraint not go back out and run up those credit cards. I overcame it by the old cliché, keeping my eye on the prize — that prize being able to propose to Kristen (or at least start the plan to) once my debt was paid off.

What is the next step for you after relieving yourselves of more than $10,000 in debt?

It’s not necessarily the next step, but more so, the constant step, which is to stay out of debt. The only debt I have (besides a car payment) is using my American Express card for gas purchases ONLY (as they provide a 3% cash back incentive on those purchases) and paying off the balance each month.

What advice can you offer to others in a similar position?

First off, realize there is an end to your debt that can be achieved. You simply keep doing what you are doing (making payments), but shift the amounts paid. BUY and WATCH David Ramsey’s Financial Peace University. It does work and will work for you.