Debt-snowball method
Let's say you owe money to different people or companies. You might feel overwhelmed and not know where to start paying off your debt first.
The debt-snowball method is a way to help you pay off your debt step by step. Here's how it works:
1. Make a list of all the debts you owe, from the smallest to the largest.
2. Each month, pay the minimum amount you owe on all your debts.
3. Decide on a specific amount of extra money you can afford to put towards paying off your debt. This is called your "snowball" payment.
4. Take your snowball payment and apply it to the debt with the smallest balance on your list until that debt is paid off completely.
5. Once the smallest debt is paid off, take the snowball payment amount and apply it to the next smallest debt on your list, in addition to the minimum amount you were already paying.
6. Keep doing this until all your debts have been paid off.
The idea behind the debt-snowball method is that paying off your smallest debts first gives you a sense of accomplishment and motivates you to keep going. It can also quickly reduce the number of debts you owe, which can help simplify your finances and make it easier to manage your debt.
So, just like when we build a snowball, we start with a small one and roll it around in the snow until it gets bigger and bigger. With the debt-snowball method, we start with our smallest debt and keep adding to it until it gets paid off, and then we move on to the next one until all our debts are paid off!
The debt-snowball method is a way to help you pay off your debt step by step. Here's how it works:
1. Make a list of all the debts you owe, from the smallest to the largest.
2. Each month, pay the minimum amount you owe on all your debts.
3. Decide on a specific amount of extra money you can afford to put towards paying off your debt. This is called your "snowball" payment.
4. Take your snowball payment and apply it to the debt with the smallest balance on your list until that debt is paid off completely.
5. Once the smallest debt is paid off, take the snowball payment amount and apply it to the next smallest debt on your list, in addition to the minimum amount you were already paying.
6. Keep doing this until all your debts have been paid off.
The idea behind the debt-snowball method is that paying off your smallest debts first gives you a sense of accomplishment and motivates you to keep going. It can also quickly reduce the number of debts you owe, which can help simplify your finances and make it easier to manage your debt.
So, just like when we build a snowball, we start with a small one and roll it around in the snow until it gets bigger and bigger. With the debt-snowball method, we start with our smallest debt and keep adding to it until it gets paid off, and then we move on to the next one until all our debts are paid off!
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