Since we’re not saving for a house and focusing on paying down my student loans using Dave Ramsey’s debt snowball method, I’ve been playing around with CNNmoney’s student loan calculator. This thing is seriously like magic!  Before our money conversation, I was doing my own number crunching at Modern Times Coffeehouse at Politics and Prose, my favorite Saturday morning spot. I was so shocked and excited when I clicked calculate that I just had to interrupt the woman sitting across from me and share my findings with her.  Since then, I’ve gone a little farther in my calculations and I wanted to share my new calculations with you!

First, let me explain the debt snowball.  The debt snowball is a pretty easy concept.  Make a list of all of your debts (minus the mortgage) from lowest amount to highest amount.  While still making minimum payments on all accounts, attack the lowest amount by paying as much above the minimum as you can.  Once the smallest loan is paid off, put all the money you were putting to the lowest one, to the next lowest.  Continue until the highest loan is paid off.

My lowest loan amount at the beginning of the year was $1,710.  The minimum payment is $50/month and the interest rate is 6.8%. Put that info into the loan calculator:

At this rate, it will take 3 years and 3 months to pay off this loan.

In our budget conversation we decided to allocate $130 to the loan in addition to the $50 minimum. Then, I realized that we actually had money in our student loan budget line that wasn’t actually being spent each month.  (My interest rates are variable and my monthly payments have gone down over the last few years but I haven’t changed the budget line). So we decided to put that money toward this loan too.  So now, each month we can put $299 towards the loan.  Put that in the calculator:

and we can have this loan paid off by the 4th of July! We’ll also save 83% in interest. Pretty great, huh?

Think that’s cool? Watch this.

Here are the terms for my next smallest loan:

If I continue to pay the minimum each month, I’ll make my final payment summer 2019.

If I use the debt snowball and roll the $299 from loan 1 onto this loan plus its minimum:

we can pay off this second loan by Easter next year!

And it will just get more powerful as the snowball continues to grow through five more loans. I haven’t crunched those numbers yet as I’m sure we’ll have some big expenses/adjustments to our budget in the next few years but this is all very exciting to me.  When I graduated college my goal was to pay off my student loans before my kids go to college. Now, I see it’s possible to pay off them well before that.

So go ahead, I dare you, play around with my new favorite toy. It should work with credit cards and car payments too.