“I want to be in debt forever” said no one ever!
How do we get out of debt once and for all? It makes sense that if we stop using debt and make regular payment we will eventually get out of debt in the distant future. This approach will take years and cost us thousand in interest payments.
If you are reading this, I know you’re not cool with the idea. Why not try the debt snowball method, like Dave Ramsey recommends, to attack our debts? With this method debts are paid off in order of smallest balance and minimum payments are rolled from one debt to the next. I LOVE this approach because it is so simple. Anyone can use it for their situation.
I SAVED OVER $44,432
From experience, I tell you that applying the debt snowball methods changes your life. I owed $104,616 in debt, which would take almost 30 years to pay off and cost about $94,000 in interest. This was too much time and money to throw away.
The snowball method saved $44,428 in interest and got me out of debt in 20 years instead of 30.
As you can see a lot of time and money is save by changing the debt payoff approach. The debt snowball method is a winner because you also benefit from experiencing quick wins as debts got paid off.
DEBT SNOWBALL IN ACTION
How does the debt snowball work?
The debt snowball method is used to prioritize debts. The debt snowball prioritizes by the lowest balance first. You will focus on paying extra money to one debt at a time while only paying the minimum balance on the others.
Starting off is fairly simple, because we are paying the minimum payments for each debt until we pay the first debt off. Once the first is paid in full, we will add the minimum payment from the first debt to the minimum payment of the second debt. We will repeat this process until all debts are paid in full and we are debt free forever and ever.
Using my debt accounts as an example, I will show you how this looks on paper. In the chart, we can see how the payment to each debt grows over time, but the total amount paid monthly remains the same. Focusing in on payments this way allows us to have a greater impact and make faster progress.
This example focuses on getting out of debt paying minimum payments and doesn’t take into consideration that we may have options to pay even more. If you are willing and able to throw additional money at getting out of debt you will be debt free sooner and save even more money. I paid more to save more money and time.
What are the benefits of getting out of debt?
We, along with our families, will be free from the struggle of living paycheck to paycheck and not have funds to make ends meet. The weight of the debt burden will rise from our shoulders and begin to dream again. There will be no more panicking when life throws us something unexpectedly, because will address it head on without looking back. We will travel, buy homes, change jobs and experience life to the fullest.
It’s easy to ignore the financial burden of debt, but if we do, the debt will be a burden for the rest of our lives.
Make the decision today to become DEBT FREE, you will have no regrets.
Where do I start?
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What would you do if you were debt free? Will you try the debt snowball?