Debt Snowball Plan

As part of our Dave Ramsey financial planning, he discusses his “zero-based budget”, which means telling every dollar where it should go before your month begins.

Here’s how to create a budget:

  1. Write down your total income. This is your after-tax take home pay, including everything from full-time jobs, side hustles, Social Security checks or any other income.
  2. List your expenses. Total all your costs — from gas, groceries and subscriptions to bills like your mortgage and electricity. Don’t forget irregular bills, such as quarterly insurance payments or seasonal expenses.
  3. Subtract your expenses from your income to get to a zero base. This doesn’t mean you don’t have anything in your bank account at the end of the month — it just means you have zero dollars left over in your budget. You know where every dollar is going.
    1. Have money left over? You’ll need to work on your budget until you get there, allocating more to debts to help pay them off sooner, according to your Debt Snowball Plan. If you don’t have any debts, it’s time to starting building your savings and wealth.
    2. Don’t have enough money to cover your monthly expenses? Start with your four walls: basic necessities like housing, food, medical and transportation. Then look for ways to cut out unnecessary spending – and yes, your Latte is unnecessary! If debt is taking over, you should set up a Debt Snowball. You also may need to consider boosting your income with a part-time job.
  4. Track your spending. This last step may be the most difficult but is the only way to know that your budget is on track with your life.


Having a hard time with that last step? Here are some easy ways to keep you on track with your spending and savings goals as you begin to follow a budgeting plan:

  • Use our Money Manager to keep it simple and in front of you. Log in to Digital Banking to get started. 
  • Be realistic. If cutting a lot of expenses seems overwhelming, try one area at a time so you can see progress immediately. Budgeting is like an overall healthy lifestyle — you want the extra weight to come off slowly but surely and be a long-term change.
  • Revisit your budget in detail at least once a month – or even better, every payday. This will confirm that you are following your outlined plan and staying within your spending limits.  It will also allow you to see any patterns that might be throwing your budget off, or any expenses that you might have originally forgotten to account for.
  • Lastly, the most fun part – and best kind of incentive for following a budget – is to watch your savings grow! The best part about sticking to a budget is seeing the fruits of your efforts, in the form of more money staying in instead of going out!