Budget Bit$

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As a small snowball rolls downhill gathering more and more snow, it gains both size and momentum. This is the idea behind the Debt Snowball method for eliminating your debt:

Step 1: List your debts from smallest to largest.

Step 2: Make minimum payments on all your debts except the smallest.

Step 3: Pay as much as possible on your smallest debt.

Step 4: Repeat until each debt is paid in full.

Example:

List your debt in increasing order by your smallest to largest debt:

  1. Medical Bill- $25 monthly payment,Total left on bill = $135. <<<<< Smallest debt.

  2. Furniture Bill- $75 monthly payment,Total left on bill = $766

  3. Credit Card Debt- $12 monthly payment, Total left on bill = $1536

  4. Car Payment- $279 monthly payment, Total left on car = $7836

  5. Student Loan- $80 monthly payment, Total left on loan = $21,345

Make Minimum payments on debts #2 through #5.

Now FOCUS on the smallest debt #1. Squeeze as much money out of your budget as you can and budget it toward debt #1. Each month, continue to FOCUS on the smallest debt while making minimum payments on the others. Each time a debt is eliminated, you'll have more money to apply to the rest.

For more information, see: Debt Snowball method

Did you know??

Good Neighbors now offers FREE Budget Coaching! If interested in an appointment, please call 865-681-5420 or email contact@goodneighborsbc.org.