Get the Ball Rolling … Snowball Debt Elimination
“I’d like to be debt-free”. This is a goal we often hear from clients and is also one of the most satisfying goals to reach. Between mortgages, auto loans, student debt, credit cards, etc. the list can get long and the amount can be overwhelming. A good way to attack multiple debts is with a popular technique called snowball debt elimination. By utilizing snowball debt elimination, overcoming debt can become a more manageable and (dare I say!) fun task. With U.S. household debt at $11.85 trillion it’s time to get started.
As a kid, the best way to start building a snowman was to make a small ball and start rolling it around the yard. With each turn the snowball becomes bigger and each turn picks up more snow. Next thing you know, you have a whole snow family in the front yard. Snowball debt elimination works just the same way. Start by creating a list of debts from smallest to largest. Focus any extra money in the monthly budget on the smallest debt first while making minimum payments on the rest. Once this smallest debt is paid off then take the money that was being used to pay off the first debt and add this to the minimum payment on the second smallest debt. Use the same technique of combining payments right down the list. As the list of debts becomes shorter the payment continues to grow and the debt is paid off faster, creating a snowball effect.
Once the ball gets rolling, so to speak, the positive feedback of paying off debts builds momentum which makes the process of debt elimination fun and empowering. Watching the plan work and debts being paid off for good is a huge motivation. This can help change behavior to free up more money each month for debt elimination and to stay debt free in the future.
If you need help getting started or would like assistance seeing how this can work for you, please give us a call.