What if I told you that the total American household debt was over
thirteen trillion dollars yes with 80 it goes without saying that there are a
significant number of people in debt and in this video I want to share one of the
most effective methods for eliminating debt this snowball method the snowball
method is a four-step debt reduction strategy that works by paying down your
debts in order of smallest to largest no matter the interest rate now let's go
over these four steps in more detail so you can say goodbye to your debt for
good step number one arrange your debts from smallest to largest on a piece of
paper or an Excel spreadsheet lists out each of your debts in order from
smallest to largest this could include things like credit card bills owing to
family members student debt and even car loans when making this list remember
that you were organizing these debts by their outstanding value and not the
interest rate while many people will argue that the debt with the highest
interest rate should be paid off first this isn't the best method for everyone
you see if you start by tackling any debt other than your smallest one you
may start to become discouraged as you pick away at your higher value debts not
seeing nearly instant progress for many people is enough to help them quit on
paying down their debt altogether this is why the snowball effect is so
powerful because you can start to see your progress right away as you begin to
stroke out all your smaller debts soon after implementing this method the final
part of step number one is to write down the minimum payments for each debt you
have and then you're ready to move on to step number two step number two make the
minimum payments on each debt now that you have all your debts documented it is
now time to start paying them down each and every month you're gonna want to pay
the minimum payment on each debt by making the minimum payment on each day
you will avoid hurting your credit and in case you weren't aware your credit
rating affects numerous aspects of your life like your ability to get a mortgage
and obtain favorable credit cards and even get you a job step number 3 pay as
much as you can on the smallest debt now like I said in the last step you will
want to be consistently paying the minimum payments on all of your debts
that is except the smallest one smallest debt which if you set up your
working paper correctly will be at the top of your list is the debt that you
will now place most of your tension on your goal is to pay down this first debt
as fast as possible in order to do this you may consider taking on extra work
such as freelancing or working overtime to make this happen some very lucrative
freelance jobs I've done in the past include graphic design business coaching
and copywriting but you should pursue jobs that match your own skillset after
committing to paying your smallest debt down on a consistent basis you'll soon
be able to stroke off the first two your debts and move on to the next one step
number four roll over your payments and repeat until your debt free you've now
crossed off your smallest debt and it's time to move on to the next one in order
to put the snowball method into full effect what you will do next is begin to
pay down your second smallest debt but instead of making the minimum payment
you will contribute the minimum payment from the lost debt paid off plus the
minimum for this current debt moreover like the last time you paid down a debt
all the extra cash you have available should be put towards a second small
step while still continuing to make the minimum payments on the larger balances
once you get the snowball rolling you will soon begin to notice that you'll be
contributing larger and larger amounts towards your debt making them disappear
in no time thanks for watching if you want to go
from the life you have to the life you deserve then hit the subscribe button
now
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