Have debt??

Let's face it. Debt sucks and most of us have some. So, how do you get rid of it? I will talk about two methods below but there are two things you should do first:

A. Make sure you are spending less than you make on a monthly basis. I'm not telling you to budget but I am telling you to determine a way to make sure you're spending less than you make. 

B. When you buy or pay for something, it needs to come directly out of your bank account. There is an emotional connection when we see money leave our accounts. This is why you spend more using a credit card than you do paying cash. There is a reason behind all of the points programs. Companies know if you use your credit card you will spend more. If you insist on a credit card then as soon as you tap or swipe, pull out your phone and make the payment.  Do the same if you order online. Use your credit card and make a payment. You need to feel the money leaving your account or you will spend more.

The Snowball method vs Avalanche Method:

The Snowball method is simple. Start by listing your debts from smallest to largest. Ensure you make minimum payments on all your debts- except the smallest. That debt you pay as much as you can afford. What happens next?
Repeat until each debt is paid in full!

The idea is that you gain momentum with each payment. As you watch the smallest debt decrease and finally get paid off not only encourages you it motivates you to tackle the next debt. The money you put towards paying down the first goal is free to pay off the bigger debt and so on.

Step 1: List your debts from smallest to largest regardless of interest rate.
Step 2: Make minimum payments on all your debts except the smallest.
Step 3: Pay as much as possible on your smallest debt.
Step 4: Repeat until each debt is paid in full.

The avalanche method (Also simple in nature) strategy is to organize your debt from highest interest rate to lowest. Make sure you continue to make minimum payments on all your debts. The debt with the highest interest rate pays as much as you can afford until it is paid off. Then Repeat until all debts are paid in full.

Step 1: List your debts from smallest to largest interest rate.
Step 2: Make minimum payments on all your debts except the one with the highest interest rate.
Step 3: Pay as much as possible on the debt with the highest interest rate.
Step 4: Repeat until each debt is paid in full.


If you want to talk about these methods, contact me today: [email protected]