The Snowball Effect
Nick Vance Date: February 9th, 2018 8:00 AM
The snowball effect for paying off debt is a fantastic concept and very easy to understand.
Let's Say You have 5 recurring debts:
|
Debt Type
|
Total Debt
|
Monthly Payment
|
|
Mortgage
|
$150,000.00
|
$1,100.00
|
|
Student Loan
|
$100,000.00
|
$600.00
|
|
Car
|
$15,000.00
|
$350.00
|
|
Medical Bill
|
$10,000.00
|
$200.00
|
|
Credit Card
|
$10,000.00
|
$150.00
|
Looking at this chart, your lowest payment is your credit card. When you plan your budget, work into your budget an additional 10-20% to put towards additional debt payment.
· Apply “additional payments” to your monthly credit card payment
o Continue payments until your total credit card debt is paid off
o You now have $150 plus the 10-20% surplus available in your budget, this now becomes your total surplus
· Apply total surplus to your monthly medical bill payment
o Continue payment until your total medical bill debt is paid off
· Continue following this process for all your debts
This is the snowball effect It’s simple, yet extremely powerful. All it takes is a little planning.
BN Focus – Go to your Snowball debt calculator and enter in all of your debts. Then choose which debt you will eliminate first and begin your journey to becoming debt-free.
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