When debt is piling up, it can be overwhelming to know where to start. Do you start with the biggest debt? The one with the highest interest rate? The most recent debt? The oldest one?
There’s one not-so-secret way to succeed in paying off your debt, and it’s this: start by paying off your smallest debt first.
That likely wasn’t the answer you expected – but read on to find out three reasons why this method is tried and true at helping people get financially free!
The Snowball Method
We did a more comprehensive deep dive into the snowball method, but the basics are this – list your debts from smallest to largest, then start by paying off the smallest debt first. Why does this work? Here are three solid reasons!
It helps you build financial habits.
It can take a bit of practice to get used to scraping and saving extra money to pay off your debt. By starting small, you can make small adjustments in your budget (like eating out less or shopping at thrift stores for clothes) and work on building better financial habits that can help you reach your goal.
A faster win will build your confidence.
Chipping away at a multi-thousand dollar debt can be a lot of work – and if you don’t see progress right away, it can be discouraging and cause you to lose focus or fall behind. A small win early on in your financial freedom journey can keep you motivated to keep working at it!
You’re already primed and ready to start paying off your next debt.
Let’s say you’re setting aside $200 a month to pay off a $600 debt. After three months the debt is paid – and you can start putting that money towards paying off your next debt! That’s where the “snowball effect” comes in – you’re building momentum and getting better and better at paying off your debt with every dollar, and you’ll be debt free in no time.
Remember – starting small is a great way to take your first step towards living debt free. You’ve got this!
Need a partner to help you tackle your debt and get financial freedom?
Strong Tower Consulting can help!
Book your free 30-minute session today, and find out how you can get out of debt and pursue financial freedom!
