A very common and effective strategy to pay off debt is the known as the debt snowball. Picture a snowball that starts off little as it rolls down a hill, but gets bigger as it continues rolling and turns into to a snow boulder as it builds momentum! That’s how the debt snowball method works. It’s a strategy that permits you to gain momentum as you pay your debt off. Start by listing of all your debts in order from the lowest balance to the largest balance. Now, any extra cash you have needs to go toward the lowest balance first, until that lowest balance is paid off. Once the lowest balance is paid off, whatever payment was being made toward that balance, along with any extra cash, would now go toward the next lowest balance on your list. So for example, if you were paying $125 monthly on the lowest balance and $57 on the second lowest, whenever you repay the smallest, take that $125 and the $57 so that now you can pay $182 monthly on that next balance. Continue to repeat those steps and keep applying payments to debts until you have everything paid off! Obviously, keep in mind that during the time of applying this strategy and paying off the debt, it’s absolutely crucial that the continued accumulation of more debt doesn’t happen.
The Simple Strategy to Pay Off Debt
The burden of debt can take its toll in so many ways. That’s why it’s so important to get control of your debt situation. There is nothing better than seeing debt get removed from your balance sheet. There will be no more worrying about that debt, no more bills or calls from lenders and creditors…it’ll just be gone! Getting rid of it is not something that will happen overnight, but your health and financial well-being will thank you for it.
Just remember, once it’s gone it’s important for it to stay gone! What sense would it make to get yourself in over your head with debt again once you get rid of it? You’ll never reach financial freedom that way. With determination, discipline and the right mind set, you will reach your financial goals and eventually achieve financial freedom. By paying off those debts, you can stop paying those lenders and creditors and start paying yourself, by putting that new found money toward your savings and investing goals. The sooner you get control over your debt, the sooner you’ll be on the road to financial freedom.
“Debt is like any other trap, easy enough to get into, but hard enough to get out of.” – Henry Wheeler Shaw
But here’s the thing, as a consumer, you have to spend your money on the things that you need, right? And (let’s face it) you enjoy spending money on the things that you want. While there’s nothing wrong with that, the problem comes when you put yourself in debt over satisfying your wants or even worse, justifying your wants as needs. It might seem like fun at first, but when you start having trouble making payments, the fun is over. Consumer debt is a killer when it comes to savings goals and overall financial well-being! Whether you’re saving for emergency funds or investing funds or whatever fund you’re trying to set goals for, consumer debt will hold you down. Debt that’s accumulated over time because of over-spending needs to be greatly reduced if not completely eliminated in order to achieve financial freedom.
The first step to reduce or even eliminate debt is to STOP accumulating it! If you don’t have the cash to purchase something you don’t (truly) need, then you shouldn’t be buying it. You have to get control over your spending habits. You have to analyze what you truly need and what you don’t need. In doing this you will need to make some sacrifices, even if only temporary, to get the ball rolling! Once you come to grips with that and commit to it, you can then…and only then, begin to tackle it. No matter how daunting it may seem to you, it can be done. It will take time and patience to get yourself out of it, but by becoming more aware of your situation and taking the necessary steps to change it will get you on your way to financial freedom.
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