HOW TO USE THE DEBT REDUCTION SNOWBALL PLAN!
Want to get out of debt fast? Then commit to the debt reduction snowball plan.
You might be thinking, “Oh yeah, I’ve heard of the debt reduction snowball plan. It makes sense – you pay off your debts one at a time until they’re gone. I got it.
No, you missed it.
How the Debt Reduction Snowball Works
The debt reduction snowball is about more than just paying down your debts one at a time. There are three major elements to the debt reduction snowball:
1. Your initial lump-sum contribution
2. Your contribution each month
3. Laying out your debts – from smallest to largest
And you know what? Interest rates have pretty much nothing to do with the debt snowball. Do you know why? Because paying off debt is 80% emotional and 20% logical. Paying off debt is more about immediate progress than it is about math.
Your Initial Lump-Sum Contribution
This is the first major step of the debt snowball. To get the snowball started, it works best to throw as much money at your debts as possible.
After all, you’re committed to getting out of debt, right? And you’re going to do it as fast as possible, right? Then take that $5,000 that you have in savings and throw all but $1,000 at your debts. Then, you’ll use the savings from those debt payments (that you no longer have) and pay off your remaining debts in no-time!
If you don’t have much extra money right now, then read this post to help you get started – How to Create Extra Cash Fast.
Your Contributions Each Month
The second key to the debt reduction snowball is your monthly payments. The more you can put toward your debts each month, the faster you’re going to be able to pay them all off.
This can be done via two methods:
1. Reduce your spending
2. Increase your income
The best way to save money each month is to lay out all your expenses. Look at them, ask yourself if they’re necessary, and eliminate them if they’re not.
How to Lay Out Your Debts
I suggest that people first pay off their debts from smallest to largest before trying to pay them off based on interest rates alone.
Sure, that 18% credit card debt might freak you out like crazy. But if you tackle the smaller debts with intensity, you’ll reduce your debt load much sooner than you ever thought possible!
Set Up Your Own Debt Reduction Snowball!
Several years ago, when I wanted to start helping people get out of debt as rapidly as possible, I decided to create material that could help them on their journey. In our online store you can find my 2 GET SMART books that will help you figure out:
1. How to set up your debt reduction snowball
2. The length of time it will take to get out of debt at your current pace
3. How to speed up your debt reduction snowball by upping your initial contribution or your monthly payment