Debt Reduction

We Paid Off Our Credit Card Debt Using This Strategy


That’s how we paid off our credit card debt.

Back in 2005, my wife and I created our debt reduction plan.  Fans of Dave Ramsey, we established a mini-emergency fund and then we set to work on our debt snowball.

We were locked-in and focused – ready to get out of credit card debt.  Rather than send just one extra payment, we made several micro-payments, throughout the month.

This kept us connected to the debt reduction process.  Watching our credit card balances drop really kept us motivated.

Each month – we followed the debt snowball list – and made minimum monthly payments to all of our creditors.

We would then send an extra, principal-only payment to the first account on the list.

With our budgeted-for monthly payment and extra payment accounted for – the fun would begin.  We would look for ways to save money – and at the end of the week, we would send a micro-payment to the first account on the debt snowball list.

Very quickly, we began to erase our credit card balances.  The micro-payments began to add up – to the point where we were applying more than twice what we had an anticipated, each month, towards debt reduction.

Long-term readers will remember that we managed to pay off our credit card debt in less than a year.  Using micro-payments really worked for us.  We now use the same strategy to fund our savings and retirement accounts.


Instead of making micro-payments to our mortgage company – we make micro-deposits to our savings account.  At the end of the month, we then send a single, principle-only payment.

The micro-deposit strategy avoids any issues with companies that limit the number of payments allowed during a particular billing cycle.

Using micro-payments is often referred to as snowflaking – a term I first heard from a fellow personal finance blogger.  Since then, several others have written about snowflaking, snowflakes, and the process of using snowflakes to get out of debt.  Check out their articles for more information about the power of micro-payments.  Blessings.

3 thoughts on “We Paid Off Our Credit Card Debt Using This Strategy

  1. I too am a big fan of Dave Ramsey and have almost completed baby step 2. However I am also saving up a deposit for a house (baby step 6) at the same time. Long story! I love reading your posts and seeing how well your doing with your mortgage payments – congrads!!
    Reading other peoples story helps me with the day to day of getting out of debt, so thank you! 🙂

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