Debt Snowball Method

Over a year ago, Jammie and Cornell Brooks of Peoria, Illinois, were $54,200 in debt with two young children. Of that amount, $37,000 was in car loans, $6,000 was in student loans, $5,600 was in credit card debt, and the remaining debt was in department store cards.

When Jammie, 33, decided to return to school in fall 2004 to become a dental hygienist, Cornell, 34, who made $13 an hour as a team leader in the appliances department at Lowe’s, accepted the responsibility of paying all the bills. It was grueling and he often turned to credit cards to supplement Jammie’s missing $18,000 yearly salary as a dental assistant.

Once Jammie completed her program in 2006, she was able to increase her annual income to $39,000. Two years later, Cornell became a firefighter, boosting his earnings to $60,000 a year. But even with a combined income topping $99,000 a year they were still living paycheck to paycheck.

“Whenever we got paid we didn’t have any money left over. We were tired of living like that,” says Jammie.

It wasn’t until Cornell’s colleague encouraged him to read The Money Makeover by financial expert Dave Ramsey last January that Cornell and Jammie  began to understand how to break free from debt. “I read success story after success story and thought, ‘Why can’t that be us?’” recalls Cornell. “I was so excited I couldn’t wait to get home and tell my wife.”

Determined to win their battle over debt, the couple sat down and outlined a budget. “We sacrificed, we shopped less, and we started to eat differently,” says Jammie. But changing their eating habits was only a start.

“We sat down with a pen and paper and put all of our expenses on the left column of the paper and then put our income in the right column and then we cut the fat,” explains Cornell. They eliminated  unnecessary expenses like cable,  landline phone, and water home delivery services. Family trips were capped at $300 and  they lowered their car liability coverage. Both agreed to forgo impulse purchases.

Through cutting expenses and gaining additional money from Cornell’s side job fixing brakes, the couple produced a monthly disposable income of about $3,000. Moreover, they soon realized they could manage their household on Jammie’s $39,000 salary. Her paychecks were deposited into the family’s joint account to pay for monthly expenses and day-to-day needs. Meanwhile, Cornell’s bimonthly paycheck of $1,200 was applied to their debt.

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