Cool Financial Smarts! Orig post: June 2, 2015
Getting out of debt feels so good !! Goodbye student loans,
goodbye credit card debt- heellooooo peace of mind!!
There are a few different methods you can use when it comes to paying off your debt. Today, I’m going to talk to you about the Snowballing Method. Famous money man, Dave Ramsey swears by this method because most people have trouble motivating themselves to pay off debt. Seems like a huge hurdle right? Starting with paying off the lowest balance energizes and motivates us to pay off the rest of the debt, it is human nature.
The Snowball Method involves making a
list of all of the balances you owe (credit cards, car loans, student loans,
etc.) and then paying down your smallest balance first. Pay the monthly minimum
on all your balances except your smallest balance. This balance you will
pay down aggressively by applying as much extra money to it as possible. Once
you eliminate the smallest balance, go to the next smallest balance until
you’ve paid everything off.
The trick is to apply the extra money you freed up from your previous credit card to the new balance.
The power of this method is that you start seeing results in a relatively short time which motivates you to keep applying. Paying off debt is about behavior. Start attacking those small balances and feel GREAT about the steps you are taking to being debt free!
Startling Statistic: The average American card-holder
carries more than six credit cards, and the average household that has credit
card debt owes more than $15,000 on their cards.
“Therefore if you have
not been faithful in the use of worldly wealth, who will entrust the true riches
to you?” Luke 16:11
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