The purpose of this activity is to design a plan to reduce debt using the debt snowball. Open the Debt Snowball tool on www.foundationsU.com. Create a plan to pay off the debt in the least amount of time possible. The tool will automatically organize the order of payments for you.

Answer the following questions:

1. If only the minimum payments are made, how many months will it take to be debt-free? (On the website, the debt-free date is in the upper right corner.)

2. If only the minimum payments are made, how much is going toward debt monthly?

3. How much money is left over for living expenses per month? (Assume this person makes a gross income of $40,000 and pays 20% for taxes.)

4. What is the percentage of debt compared to income? (Divide the total monthly debt payment by the monthly income.)

5. Is this percentage of debt compared to income sustainable over time? Why or why not?

6. What are some ways you can get out of debt faster?