Win At Paying Off Debt: How to Gain Momentum When Your Debt Feels Impossible

Apr62018

Do you have a mountain of debt looming over you? Is there a box or closet you use to collect bills and outstanding debt notices from companies? Or maybe you are like I was, and you know you have debt, but you keep ignoring it and have yet to face the reality of exactly how much you owe. No matter where you are today, the great news is, you don’t have to be there another day. There is a way for you to accomplish paying off debt, regardless of your financial situation.

The reason I know this works is because I have done it! We have been able to pay off ~~$40,000~~$50,000 of debt, and cash flow $35,000 for two babies in the past two years by using this method.

How It Works:

1. List all your debts from smallest to largest (ignore interest rates!).

2. Make minimum payments on all your debts (except the smallest), while you focus on putting as much extra money on the smallest debt as possible.

3. As the smallest debt is paid off, you then add the payment you were making on the smallest debt and roll it into the next debt payment.

4. Continue doing this until you are debt free!

Snowball Example:

Let’s say you have debts totaling $20,500, that currently feel overwhelming! Begin by listing them in order from smallest to largest, and writing down their minimum monthly payments.

$1,000 Credit Card – minimum payment $50
$2,500 Medical Bill – minimum payment $100
$3,000 Personal loan – minimum payment $150
$6,000 Car loan – minimum payment $250
$8,000 Student loan – minimum payment $300

While you begin your Debt Snowball, you make minimum payments on all the loans except the first one. This is where selling your stuff, getting a second or third job, and reducing your spending will allow you to put extra money into paying off your smallest debt first.

For this example, let’s say you got a second job that brings in $1,000/month (go you!). The credit card debt would be paid off in 1 month! This would then allow you to put $1,150 toward the medical bill the next month ($1,000 extra job + $50 credit card minimum payment + $100 medical bill minimum payment). You would have the Medical bill paid off in just over two months. Do you see where this is going?

By the time you had your snowball rolling, your momentum would be so fast, everything would be completely paid off in 12 ½ months! That is just over a year to be debt free!!

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Why This Will Work For You.

The Snowball Method is so effective at allowing you to pay off debts because it changes your behavior. Instead of feeling like you are drowning in debt and it will never go away; it gives you a plan to use the money you already would have been spending on minimum payments to attack your debt with. As your snowball grows, you have more and more money to throw at your debt so you actually make significant progress. This motivates you to keep going!

Some people will say you should be paying off debts with the largest interest rate first because it will save you money long-term (this is the Avalanche Method). That may be true in some cases, but when you are paying off debt, I believe 90% of what you are doing is mental, which subsequently changes your behavior.By paying off the smallest debt first, it gives you a win. You feel good about what you are doing, you see the progress you have made, you know you will NEVER have that debt to pay EVER again, so you stick with the plan!

The Snowball Method also allows you to build momentum to pay off debt faster than you ever thought possible. In this example, if you were to sit and look at $20,500 of debt as a whole, it feels impossible. But, when it is looked at in terms of the Snowball Method, you can see how quickly it can be paid off once the momentum of payments builds. This person could struggle for years trying to pay off every loan at the same time, and not make any significant headway on their debt. With the Snowball Method, all of this is knocked out in just over a year. What a difference a plan makes!

If you are serious about paying off debt, but don’t know where to start; start with the Snowball Method. Stop ignoring your debts. Sit down today and write them out smallest to largest. Look at your budget to see where you can come up with extra money to throw at your smallest debt. Find things to sell or find another job to pay off that first debt FAST.

Just like the example above, see how many months it will take you to pay off your debt. I bet you will be surprised at how soon you could become debt free. The Snowball Method will work for you! It will change your behavior, give you quick wins to keep you motivated and build momentum to pay off debt faster than you ever thought possible.

Download our FREE Debt Countdown Coloring Sheet to visualize your progress. Get instant access by signing up below!

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How many months until you’re debt free?

Of courseyou could! It’s crazy the amount of money people can actually save.

Download this money spending assessment and I’ll show you how to:

+ Find your biggest opportunities for saving TONS of money within your current budget!
+ Start implementing very simple & proven tips to save you thousands. (NO joke)
+ Set super easy and achievable budgeting goals to take control of your finances & increase the digits at the end of the month in your bank account.