August 20, 2022 2 min read
Let’s dive into the debt snowball method and give you the exact framework for how to use this debt payoff method.
The Snowball method is very simple and straightforward to set up and execute.
Step 1: Write out your credit debt (all of the debt collectively–this means all of the debt you have).
Write down all of the credit card & loan accounts on a piece of paper or using an excel document. This allows you to see everything you owe in one place. This might be stressful, rip off the Band-Aid and write it all out so you can proceed with this
Step 2:Organize your debt
Once everything you owe is on paper or on an excel document. Start by organizing and prioritizing your debts fromsmallestbalance tolargestbalance.
Step 3: Start making payments!
You've got your debt on paper, organized from smallest to largest credit balances, now start paying off yourLOWESTbalance credit card and tackle your debt a payment at a time.
Now let’s look at an actual example of how the debt snowball could work.
List out all of your debts, either on an excel document or grab a good old fashion piece of paper.
Here is what you will document on your list in four individual columns:
Once everything is on paper organized your debts from the smallest balance to largest balance, now you have your priority list and can start tackling your payments. Remember, during this process you need to make ALL of your monthly minimum payments. Any left over money should be used to tackle the first credit account on your list which will have the smallest balance.
Implementation is key, you have to get all of your information in one place, set your priority list, then chip away balance by balance, card by card. Use your monthly budget to tackle each payment and keep track of your debt payoff as you go. Seeing your success will help you stay focused on your goals.
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