Video Transcript
Hey, Tammy here!
This video is going to be all about explaining how the debt snowball works, because the debt snowball is the BEST way, hands down, to go about paying off your debt and getting yourself debt-free… because IT WORKS!
So how do you do a debt snowball? First step is you list all your debts from smallest balance to largest balance. You might have $50, $200, $1,000, $5000, $20,000 and $50,000. Next to that you list all the minimum payments on each of those debts. And you total your debt and you total your minimum payments and then every month you’re going to make the minimum payments on all your debt.
And then the next step is you scrounge up some extra cash that you’re going to use to get out of debt faster than just paying your minimums. And the trick of the debt snowball is that all the extra money goes towards that smallest debt and you get that thing paid off as fast as you can! And once you have that one paid off you put everything you were paying to that smallest debt towards your next smallest debt (you keep paying the minimums on your other debts). And when that one is paid off you put that all towards the next smallest debt. And you keep cascading that down until by the time you get to that last debt, that largest debt, you have a really good chunk of change that you’re throwing at that debt. And that’s why the snowball effect is called a snowball… you start with your little “snowball” for the first debt and then, because you keep adding more and more and more to the payment, that snowball keeps getting bigger and bigger as it rolls down the hill. So by the time you get to your last debt you’ve got a really big snowball that you’re throwing at that debt!
There are two things that make this method so super-powerful; the first thing is that because you’re starting with those smallest debts you have some really fast initial success paying off debt. Getting those first few ones paid off superfast will motivate you and keep you going because you’re thinking “I can do this!”, “I can get out of debt”. For maybe the first time in your life you are seeing success at getting out of debt! This is super- powerful and will keep you going.
The second thing that makes this so powerful is that by the time you get to that last debt, that large debt, you’re throwing even more money at that one so you’ll pay off that one at a faster rate than you paid off your small one.
Those two together make this the absolute best way to pay off debt and to SUCCEED!
Action Step
Your action step for this video is to set up and get going on your debt snowball.
You start by listing all your debts smallest balance to largest balance. Then list your minimums. And then take all that extra money and throw it at that smallest debt and work your way down.
And once you’re done… once this is all paid off… Good Job! Congratulations! You are now debt-free and you can be debt-free for the rest of your life!
If you need help getting your debt snowball started and getting it going I would love to help you with this because it’s just such an amazing thing to do. Please feel free to email me, write a comment, get in touch as I would love to help you with your debt snowball.
That’s it for now!