Many people get into debts in young age by getting a student loan and pay it life long , but what if i say you can repay your debts if you follow this simple debt snowball method. Now people who use this method on average are debt free in just 18 to 24 months.
Snowball Method
People who use these method on average are debt free in just 16 to 24 months. Why? How? Because it actually works. So today we’re going to go over the debt snowball method and how it works so you can start knocking out your debt as fast as humanly possible.
With the debt avalanche, you pay your debts off in order from highest interest rate to lowest interest rate, regardless of the balance. Now, this might sound like smart math, but here’s why it’s not. Like Ramsey said ” Debt isn’t really a math’s problem, it is more of a behavior problem “. And if you want to change your behavior and get out of debt, you need to stay motivated.
Then you’ll finally be able to start saving and investing for your future. And who knows, maybe one day you’ll have enough money to buy your own mansion and Ferrari.
Some people are pushing debt consolidation, which is where you combine your debts into one giant payment by taking out another loan to pay off your existing debts. That’s a big nope from me. Think about this for a second. We’re gonna use more debt to pay off debt. Yeah, not a good idea. You’re just shuffling your debt around .
So the way that you repay your debt has to take this into consideration. And that’s why the debt snowball method is the best way to do it. Like I said earlier, people who use this method on average are debt free in just 16 to 24 months.
So how does the debt snowball method work?
Well, to put it simply, repay your debts in order from smallest to largest balance, regardless of the interest rate. Now, once that smallest debt is paid off, you take that entire amount that was going toward that debt and apply it to the next smallest debt on your list.
And as you do this, you gain momentum as you knock out each remaining balance, like a big beautiful snowball rolling down a freshly frosted hill. Next thing you know, is that you’re debt free.
Here’s the debt snowball in four easy steps.
1. List your debts from smallest to largest regardless of it interest rate .
2. Make minimum payments on all of your debts except for the smallest one.
3. Transfer all extra money as you can to that smallest debt until its closed.
4. Repeat until each debt is paid in full.
If your largest debt is a student loan with a high interest rate, do you know how long it’s going to take to put a significant dent in that giant balance? Yeah, You’re not going to feel like you’re winning for a long, long time. But when you use the debt snowball method, you get quick wins sooner.
And then you’re on to the next one and the next and the next. And suddenly you’re putting hundreds of dollars a month toward your debts instead of tying any little minimum payments. And trust me, when you see that snowball actually working, you’ll be more likely to stick to it and become debt-free faster.
How to stay motivated when it’s taking a long time to repay?
The debt snowball can feel like a grind, especially when you’re chipping away at some of these bigger debts. But most people are done within a couple of years. But if you have a lot of debt, it could take longer.
So here’s some things you can do to keep up the momentum.
1. Create a visual reminder of your money goal. You can print out a tracker for your fridge, put a sticky note on the bathroom mirror, make your phone background your debt payoff journey. Whatever you need to do, keep it visual and in front of you every single day.
2. Revisit your why you are doing it, think about that. Keep that front of mind. Maybe you want to change your family tree. You want to avoid the mistakes your parents made. You want to retire with dignity. You want to be a homeowner. You want to have a family one day and not be burdened by debt. These are great reasons to get out of debt.
3. Find people who can keep you motivated and accountable. If you’re surrounding yourself with broke people who don’t care about your money journey or growing, that’s gonna keep you broke. So get around other people who are also growing. Get a friend who wants to budget with you on the weekends. Get your spouse on board and get them fired up about this. Join a Financial Peace University class to get around other weird people who wanna stop being normal and broke. These are some great ways to get some community in your life.
Celebrate small wins…
So you’ve got to celebrate the little wins. Stop comparing yourself to other people and acknowledge how far you’ve come. Celebrate the little wins. Stop worrying about what someone else did and where they’re going on vacation and what car they’re driving. Run your own race.
So plan your debt repayment , make a list of debts to which you gonna pay first and close to create milestone . So trust me, you can do it and it will be worth it.