Free Debt Relief : Debt Snowballing, part 2
Debt-snowballing ,part 2
Okay, where was I?
Oh yeah, step 3.
For my step 3, I’ve chosen to compromise, I’m doing my smallest debt first then switching to highest to lowest interest rate method. I’d include my mortgage on the list and just put it last since the interest rate is the lowest.
John Commuta determines the first debt to be paid off by dividing the debt amount by the payment and starts paying the debt with the lowest result. So if you owe $1000 and the payment is $50 he says you can pay it off in about 20 months.
The fourth step is to pay the minimum on your first bill on the list every month plus an “Accelerator margin”. An accelerator margin is a little extra money added to that payment to speed up the payment process. It can be anything $10, $100 or even more.
The Accelerator margin can come from anywhere it can come from brown bagging it or cooking at home or a yard sale or all of the above. I’m in favor starting a small business to create your margin since it has benefits beyond just extra money. I’ll write more about that later.
The fifth step is to continue paying of the first debt until it is gone. Yeah!!
The Sixth step is to roll the combined accelerator margin and the payment from first debt to the next debt on the list. Now your accelerator is much bigger because it includes both the original accelerator and the payment from your first debt.
The Seventh step repeat steps five and six until your debt free.
I do have an extra step, a sort of a step five and a half. Celebrate and congratulate yourself for getting rid of one debt. I think it is extremely important to look for milestones along the way to Debt freedom that you can celebrate. I think it helps keep you going.
Get Going.