Here’s how to use the snowball payoff method.
- Calculate your total funds available after expenses that you can pay towards your accounts.
- Pay the minimum amounts on all your accounts.
- Pay the balance of the funds into the account with the smallest amount owed.
- Once the account with the lowest balance is paid off, then you have freed up that accounts monthly payment towards the next account with the lowest balance.
- Repeat until all accounts are fully paid up.
Once you have paid off an account, do not be tempted to lower the payments you make towards your debt. You’ll want to roll over the payments from from one paid-off loan to the next.
If you stick to this tactic, you will take a huge chunk out of your debt in very little time.
Benefits of the Debt Snowball Payoff Method.
- The Debt Snowball Method rewards you very early in the process,compared to other methods that save you more money over the longer term in interest paid. This can be a make or break factor when it comes to keeping motivated to continue paying off debt.
- The Debt Snowball Method frees up your cash flow faster than any other method. Every time you get rid of a debt, you also get rid of the minimum payment obligation of that debt. This can be a huge relief when money is tight.
Whether you simply need to free up some cash flow or want to wipe out your debt completely, the Debt Snowball is a method that will give you noticeable results in a very short time.
Is it a magic trick that will eliminate all of your debt? No, however it’s an incredibly valuable tool that has been used by thousands of people (Including myself) to very effectively reduce the stress of your monthly debt obligations.
Have you tried this, or any other debt payoff strategy? Have a question?
Let us know in the comments section below!