The Snowball Method: Three Steps to Pay Off Your Debt the Fastest Way Possible
Thinking about debt can be overwhelming for many of us – mainly because it can feel like there is no solution or light at the end of the tunnel.
But just like it took time to build up that pile of debt, it takes time to pay it off.
Thankfully, there is a very tried and true method for ridding yourself of that debt the quickest route possible – and it’s called “The Debt Snowball.”
What is the Debt Snowball and How Does it Work?
Just like in a fun winter snow fight, once a snowball hits the ground and starts rolling downhill, it becomes bigger and bigger. This is how the debt snowball works. You begin whittling away at your debt with low hanging fruit – the smallest amount but easiest to take care of. Over time, you gain momentum. Simply put, you pay your debts from smallest to largest regardless of interest rate. That’s it.
How to Get Started with the Debt Snowball
To get started, first list all of your debts from smallest to largest amount (not interest rate), but leave out your mortgage.
Now, start making minimum payments on every debt except the smallest one. The smallest debt is the one you’re going to take care of first. Whether you work extra hours or sell some old things you’re not using anymore to knock it, it’s your main target. You should use any extra money above your minimum living expenses to pay off the first smallest debt.
Now that you’ve taken care of the first debt, you will have some money freed up from the small bill you’re no longer paying to attack the next smallest debt in line. So, take the new extra money and add it to the the next smallest debit.
Continue and repeat this method for each debt, adding the freed up money to the minimum payment until you can work your way through your debt and get it taken care of!
Once you conquer your debt, you’ll be on to accomplishing financial freedom – including paying off that mortgage! And the better your behavior with money will become. Still need help with your debt? Contact us today to speak with a knowledgeable representative.
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