The Debt Snowball Method – Clear Your Debts with a Debt Snowball (inc calculator)
At it’s simplest, a debt snowball is a quick and motivating debt repayment strategy. Wikipedia tells us that experts in all things finance are split about its effectiveness.
Yet despite seemingly going against logic, the debt snowball method seems to work wonders for people and has gained massive popularity in recent years.
But what IS it?
A snowball rolls from top to bottom right? It starts off small, gathers momentum and gets bigger as it rolls down the hill.
That’s how you organise your debts.
You start off small and get bigger.
So. Take your smallest debt and then put them in order until you get to the largest debt. We had nine. Yes, nine debts that we needed to pay off.
The smallest was for a few hundred pounds and the largest was, well, a lot more than that.
Bite the bullet and just do this. I know it’s not the best feeling, but the feeling of getting started and knowing you’re making inroads is good. Believe me.
As a massive advocate of the debt snowball debt repayment method, I’m going to explain it in more depth.
It’s pretty straight forward and really won’t take you long to get the hang of. Dave Ramsey uses the debt snowball method as his go to to debt repayment and it’s grown in popularity in recent years because of this.
What took me longer was getting my head around why it works so well.
Especially when you realise it’s not traditionally what we’re taught to do. It might even seem a bit ‘wrong’ to you. That’s okay.
So if you’ve ever got bored and felt like it took forever to pay off debt, this post is for you.
If you’ve ever felt like paying off those huge debts you have is so scary it’s not worth even starting, then this is for you.
I’ve been there and I’m not quite out of the woods yet. It’s terrifying. It fills your thoughts and it’s so much easier to not even think about it. But you’re here and you’re obviously looking for a way to pay off debt. This is a good way. I think it’s the best.
Hear me out, then ask me anything about it. I’ve got pretty good!
How do debt snowballs work?
You’ve got the list you just made.
You know what you owe, from the smallest to the biggest debt. You’re going to keep making the minimum payments of all of them. If you’ve been trying to throw more money at some, stop.
Don’t pay a penny more than you absolutely need to to stay out of arrears with any lender, EXCEPT on the smallest debt.
You’re going to give everything you’ve got to the smallest debt.
Sell anything that’s not nailed down. Scale back. Do everything you can to make money. My post here will give you ideas on how to get some extra money coming in.
The idea behind this is that you get the first debt paid off super fast. In a few weeks time if you can, baring in mind it’s the smallest.
Once this debt is paid off, you’re free of the minimum repayment it had, and so you add this to the minimum payment of the second debt.
The reason behind paying the smallest first is that you very quickly have a ‘spare’ minimum payment to throw at the second debt.
And after that, your snowball gathers momentum.
Every time you finish paying your ‘current’ smallest debt, you take all the minimum payments you no longer have (because you’ve paid off the debts they were attached to) and add them to the payments of the debt your working on.
I think you’re going to be really surprised how fast your debts get paid off. I know I was.
All the while you’re doing this, don’t forget to be adding to your monthly income.
We have ideas you can use to boost your cash working from home, and put anything you make towards the debt you’re working on. Make sure you’ve gone though the basics of your budget to see where you can save money. Every penny counts.
It’s then a case of repeat repeat repeat until you’re all paid up. It’s motivating, quick and easy to stick to.
Use our Debt Snowball Calculator to see how much faster you can pay off your debt adding snowflake payments to your Snowball!
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