Debt is one of the greatest sources of lifestyle paralysis out there. Right now, you may feel like all you ever do is make a bunch of minimum payments on all of your accounts. In the meantime, your credit score is OK, but the “Balance Due” numbers never seem to change that much, and it seems like you are going to have to pay that bill forever. Wouldn’t it be great if you could just find a few hundred dollars out there to give yourself some financial space?
The debt snowball can become your path to financial freedom. This is a plan for getting rid of all of your debt. That way you get to enjoy your money instead of seeing it bleed out of your account with automated payments each month.
Some people think that you should pay off the debt that has the biggest interest amount first in order to escape debt. The truth is that you should start by eliminating your smallest debt first – and then move to your next-smallest debt. As this goes on, your debt snowball builds, and you will see all of that debt fall away much more quickly than you would if you just kept making a minimum payment at a time on all of your debts.
How Does the Debt Snowball Work?
A lot of people think that they should knock out their biggest debt first. The problem with this is that it’s easy to lose focus because you get discouraged with the lack of progress that you’re making.
The first step is to put together a $1,000 emergency fund. This will take a lot of stress out of your life – because when a minor emergency happens, it won’t become a major financial hurdle. Instead, you’ll have the money that you need to take care of the problem, instead of having to make frantic calls to friends and relatives for help. Once that fund is in place, here’s how you build that snowball:
Step 1: List all of your debts, from smallest to largest.
Step 2: Make minimum payments on each debt except for the smallest one. For the smallest one, pay as much as you can afford. If you can knock it all out, great! If not, you’ve made a bigger dent to get you ready for next month.
Step 3: Keep repeating each month until you’ve paid off all your debts.
The snowball builds each time you knock out a debt, because that means you have more money each month to send to the next-largest account. You keep paying off your debt at an increasingly faster rate, until you’re debt free. You can see the snowball building each month!
The less debt you have, the more likely you are to gain approval for that mortgage that you want – and you’ll get better terms on everything from car notes to credit card interest rates. Don’t let another month filled with minimum payments go by – make progress today!
In some cases, time is of the essence and a quick temporary solution is required that an emergency fund can cover. Examples of this include; large sums of money owed to Canada Revenue Agency, A child’s college tuition, Business Capital, Unexpected Medical Expenses. In such cases, speak with your bank or a mortgage broker for low rate refinancing. If that option isn’t available, a properly crafted private mortgage with Amansad Financial can help you bridge the gap. It is more expensive, but a great alternative to consider. If you have substantial equity in your home, we can likely help you.
Contact Amansad Financial at 1-877-756-1119 to determine your options.