023: Debt “Snowballing”

023: Debt “Snowballing”

In previous episodes we discussed how to decide what debts to pay off first, how to prioritize them. Today I’d like to share with you a concept called “Snowballing”. You might be wondering what it has to do with debts?

Well, Snowballing debts means, setting up a schedule of what debts you will pay off first.

  1. Arrange your debts by Highest Interest or Lowest Balance
  2. Dedicate how much extra per month we will devote to our payoff schedule
  3. Add this additional money you will add to your minimum monthly payments
  4. Once the 1st debt is paid off, then move the extra payment and the minimum payment from debt #1 to debt #2, and so on.

I use a free site: www.whatsthecost.com to create my snowballs. When you get to the site, on the left hand side click on “Snowballing.

 
Anna Sergunina
anna@adviceonly.net

I passionately believe that in order to live a life of fulfillment and joy, we must genuinely serve each other in any way possible. I found my mission in life to serve others via financial planning. Anna regularly writes about personal finance. Her work appears on Business Insider, Nasdaq, Nerdwallet, among others. Anna is the creator of Money Flow system.

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