| There are two ways you can begin to pay off debt. | | | | If your third debt has a minimum payment of $50 and |
| There is the practice of paying off the debt with the | | | | you have paid off debts one and two, you apply that |
| higher interest rate first or the practice of paying off | | | | $150 payment towards debt number three. Now you |
| the debt with the smallest balance first. Paying off the | | | | are making a $200 payment rather than a $50 |
| debt with the lowest balance first is called the Debt | | | | payment to this debt, as well as extra money from |
| Snowball. | | | | part time work, with the impact to pay it off much |
| This is how the Debt Snowball works. You list all your | | | | quicker. |
| debts from smallest to largest. While continuing to pay | | | | The main concept of the debt snowball is the |
| the minimum balance on all other debts, you begin | | | | motivation and emotional reward you experience from |
| aggressively throwing all the extra money you can | | | | the accomplishment of freeing yourself from the |
| towards the smallest debt. You pay it off as quickly as | | | | financial chains of your lender. A large balance and |
| possible by selling things, cutting grass, cleaning banks | | | | higher interest rate may take much longer to pay off |
| at night, getting a part time job or whatever you can | | | | which could result in discouragement and giving up. |
| do legally that will bring in extra cash. | | | | However, if you quickly experience the excitement of |
| Once you have paid off the first debt, begin putting all | | | | paying off that first debt, it will inspire you to move |
| the extra money you can towards the next one. So | | | | harder and faster towards the next one. It will give you |
| what happens with the minimum payment from the | | | | an unbelievable burst of energy that screams on the |
| first debt? You apply that payment to the minimum | | | | inside of you, "I can do this!" |
| payment of the second debt. | | | | I'm not saying it will only take you one or two months |
| Let's say the monthly payment of your first debt is | | | | to pay off your smallest debt but the positive |
| $50 and $100 for your second debt. Once you pay off | | | | emotional charge that comes with seeing your |
| the first debt, you add the $50 payment to the $100 | | | | snowball of payments grow and grow as you knock |
| payment and now you are making a $150 payment | | | | out one debt after another is enough to carry you |
| towards your second debt. You more than doubled | | | | through to the end. Anything worth achieving will take |
| the amount of money you are paying on that debt! | | | | stamina and discipline, paying off debt is no exception, |
| This doesn't include all the extra money you bring in as | | | | but you can achieve it. You can be debt free! |
| well. | | | | |