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Why Should I Use the Debt Snowball Method for Debt Relief?

With so many quick-fix schemes out there, this tried and true method seems long and difficult. So why should you use it?

By Leister SolutionsPublished 3 years ago 3 min read
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Why Should I Use the Debt Snowball Method for Debt Relief?
Photo by Clay Banks on Unsplash

Every time I turn on the TV, I see a new debt settlement or debt relief program designed to engage Americans and “get them out of debt once and for all.”

Whether it’s Freedom Debt Relief, National Debt Relief or the cavalcade of other choices, there is always some business that is willing to exploit that scared feeling of being up to your eyeballs in debt.

Not saying these companies are bad by design, or that they don’t help people. I’m just using them as examples of the types of companies that offer a “solution” for your debt problems.

But what about doing things the old fashioned way, or the way your grandma and grandpa used to do it.

You remember the story of the tortoise and the hare. The hare was so fast, but he got off track and kept making wrong moves, but the tortoise was slow, plodding along, never deviating from the path and eventually won the race.

That’s effectively what the debt snowball is, but it’s really more of a blended method of the tortoise and the hare. You’ll see what in a second, but first another story.

When you were younger, did you ever make a snowman? I know I did. The easiest part was making the head and finding a few sticks to use for arms, then going inside and asking your parents for gloves and a beanie to make your snowman come alive.

However, your snowman needed a solid base to really shine and make your snowman into the best in the neighborhood. That was hard work. You rolled one tiny snowball and then often times put it on the ground and would roll it all over the yard to add snow to it and grow the snowball to make a sturdy base.

After three of those for the snowman’s head and body, you would ask a few friends for a hand to lift them in place and your work of art would come alive.

I told you that story though to tell you about why the debt snowball method works and how it works.

Think of it this way — if you have $50,000 in debt, it would be really difficult to save $50,000 to pay it all at once. It’s also awful paying minimum payments or standard payments for 25 years to keep that train moving forward and keep your head above water.

But what if you looked at your debt as chunks of the overall. Maybe you owe $1,000 to a credit card company and $2,000 on your car, and $2,000 on another credit card. Then you have $10,000 in student loan debts and $35,000 in your mortgage.

It’s a lot easier to save to pay down that $1,000 credit card, then once that’s paid off you have a win under your belt and one less payment to make. But more importantly, your snowball rolls ahead now. It’s not stuck in place under its own weight. Then you use the payment from your credit card to tackle the car and you get it paid off in five months and now you’re cooking with gas.

The snowball is moving across the yard and you use the other two payment amounts to pay off your other credit card in a few more months and so on until that debt is paid off and you’re a weird person for not having a mortgage, car payment or student loan debt.

After all, that’s exactly what your grandparents would have done. Actually, they probably never went into debt at all. Buying on time wasn’t a big thing until after World War 2 when the economy boomed.

If you want to learn more specifics about the debt snowball and how we can help you establish a high quality, actionable plan for debt relief, visit timleister.com and sign up for an introductory call.

personal finance
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Leister Solutions

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