How to Get Out of Debt Fast
You’ve felt the weight of debt on your shoulders. You know what it feels like to have your hands tied. You’re sick and tired of being sick and tired. You’ve had it with debt. You’re not going back. You’re going to fight and claw your way out of there with gazelle intensity. You’ve dreamt about financial freedom and you know you have what it takes to break up with debt for good.
You want to get out of debt as quickly as possible so you can move on to saving, investing, and living life to the fullest. You don’t just need any plan for getting out of debt, you need the one plan that will keep you motivated until the end. That plan is the Debt Snowball Method.
What is the Debt Snowball Method?
In the Debt Snowball Method you’re going to list your debts from smallest to largest of the total payoff amount. Pay no attention to the size of your monthly payments or the interest rate. The only thing you need to focus on is the total size of each debt and listing them from smallest to largest. You start with the smallest debt first and chuck any extra money you can at that debt while making only minimum payments on all other debt. When the first one is paid off, you take that minimum payment plus the minimum payment of the second debt and throw that plus any extra money at the second debt. You keep doing this until all the debt is paid off. Allowing your minimum payments to build and be applied to the next debt is what gives the Snowball Method it’s name.
Why Does it Work?
The benefit of using the Debt Snowball Method is the motivation. Paying off debt from smallest to largest allows you to achieve quick wins which keep you motivated and give you the confidence to keep going until the end. When the first debt is paid in full you realize, “that wasn’t so bad, I can actually do this” and you’ll start to work even harder at paying off the next one. When it comes time to tackle the last and largest debt, you’ve got all your previous monthly debt payments being thrown at that debt and all the motivation you can muster.
Other methods of debt payoff can be tempting to try because they stack debt in order of interest rates and it looks like you will be paying less in the long run. While that’s true, it’s been found that the other plans don’t give you the same quick wins that create the motivation you need to see the plan through all the way. Most people tend to give up before all the debt is paid off when they’re using methods other than the Snowball method.
The Best Tips for the Debt Snowball
There are a few action steps you can take to give you the most success with the Debt Snowball Method. First of all, you need to be creating a monthly budget so you can get back in control of your money and tell your money where to go (which in this case, is to the debt snowball!). Secondly, you need to do whatever you can to increase your income, reduce your expenses, or both. This could mean taking an extra job, selling all your stuff, and even meal planning to reduce the grocery bill. Thirdly, you need to have starter emergency fund in place. This means you have $1,000 liquid cash in the bank to cover any emergencies that might come up before you get all the debt paid off. And lastly, you have to work the debt snowball with focused intensity.
Open your Bible and start reading through Proverbs 6. God tells us exactly what to do if we “sign surety,” that is, get ourselves into debt. Proverbs 6:4-5 says “Give no sleep to your eyes, Nor slumber to your eyelids. Deliver yourself like a gazelle from the hand of the hunter, And like a bird from the hand of the fowler. “
How do you get out of debt? You have to RUN.