24 Mar Get out of debt with the “debt snowball” method
In my book Forever Cash, I talk quite a bit about money management. In fact, that’s kind of all that I talk about. I share wisdom from my grandfather and the lessons that my wife and I learned through the years.
One of those lessons has to do with the way that we spent our money. Before we got serious about real estate, we carried a lot of consumer debt (including a water softener that I foolishly bought from a door to door salesman). The fact is, we had a lot of debt and had to get out of it as soon as we could.
Fast forward to today. At my seminars and through my different programs I meet people who are in the very same situation that I was in. They have debt and are overwhelmed by the thought of just making the minimum payment for the rest of their lives.
I understand their pain. I really do.
That’s why I wanted to make that both they and you know about something called “The Debt Snowball.”
Made especially possible by Dave Ramsey through his radio program, this method is a way of paying off your debts one at a time, and using the small wins to stay motivated. Here’s a quote from Dave’s website:
The principle is to stop everything except minimum payments and focus on one thing at a time. Otherwise, nothing gets accomplished because all your effort is diluted. First accumulate $1,000 cash as an emergency fund. Then begin intensely getting rid of all debt (except the house) using my debt snowball plan. List your debts in order with the smallest payoff or balance first. Do not be concerned with interest rates or terms unless two debts have similar payoffs, then list the higher interest rate debt first. Paying the little debts off first gives you quick feedback, and you are more likely to stay with the plan.
Do you think that you can put this method into practice? I think that you can. And I think that if you stay focused and make wise investments along the way, you can be debt free and financially independent in just three to five years.
So stop being scared, and start being confident. Many people have used this method to get out of debt, and you can too!
To your success…