![]() We move towards pleasure and away from pain. ![]() The Harsh, but Treatable Symptom of Debtĭebt is a symptom of the pain/pleasure dichotomy. Millions are jumping on the debt freedom bandwagon and here are a few steps to guide your way. Put on your blinders, satisfy our needs but ignore your wants. So learn a lesson from your grandparents – be disciplined to reach your debt freedom goal. Many today have confused their wants and needs which has driven them to buy unnecessarily which in turn slid them deeper into debt. They saved and bought after they had money. They were disciplined and knew the difference between their wants and needs. They were not subjected, as you are, to the constant barrage of advertisement at every turn of this modern technological world. This is not the same world of your grandparents where credit was difficult to obtain and the equity line of credit unknown. We have been encouraged to buy now and pay later. Everyone has debt, right? Over the last several decades we have been lulled into believing that debt is a necessary part of life. It's what makes the financial world turn. Dinner at a restaurant will taste so much better knowing you are well on your way to being debt free. It's a smart calculator.Īfter you decide on your debt payment plan, remember to reward yourself a little with each credit card or loan you eliminate. No need to enter dollar signs, commas or percent symbols. ![]() The calculator will populate the three lower spaces to show your monthly payment, number of months needed to pay off the debt, and the interest you are spending to have this debt. Simply enter your loan amount and interest rate and choose the date you would like to see the debt eliminated. But for now, it’s time to celebrate.To see how much interest you are wasting on loans and credit cards use the calculator above. If you’ve got a mortgage, you’ll hit that hard later. It's the day when every single cent of your consumer debt is history. Why don’t we ask you to list your mortgage in your debt snowball? Because after you’ve knocked out your consumer debt, you’ve got other important steps to take before tackling the house. Yes, that includes your car notes and student loans. It’s everything you owe, except for loans related to the purchase of your home. So, if you borrowed $20,000 over 10 years, your principal payment would be about $167 per month. We’re talking about the amount of money you borrowed without the interest added. No, it's not that elementary school principal you were terrified of as a kid. Your interest rate is how much they charge, usually shown as a percentage of the principal balance. Lenders are interested in letting you borrow their money because they make money on what they loan you. When it comes to borrowing money, there’s no such thing as free. If your original loan was $20,000 and you’ve paid $5,000 already, your balance would be $15,000. ![]() It's the amount you still have to pay on your debt. Pay any less and you might get slapped with some hefty penalties. This is the lowest amount you are required to pay on a debt every month (includes principal and interest). You're just not good enough.ĭebt terminology can be confusing and overly complicated-but it doesn’t have to be! Let’s break these down in a way you can actually understand. No more watching your paychecks disappear.īecause when you get hyper-focused and start chucking every dollar you can at your debt, you'll see how much faster you can pay it all off. Step 4: Repeat until each debt is paid in full. Step 3: Pay as much as possible on your smallest debt. Step 2: Make minimum payments on all your debts except the smallest. Step 1: List your debts from smallest to largest regardless of interest rate. With every debt you pay off, you gain speed until you’re an unstoppable, debt-crushing force. Why a snowball? Because just like a snowball rolling downhill, paying off debt is all about momentum. Then, take what you were paying on that debt and add it to the payment of your next smallest debt. The debt snowball is a debt payoff method where you pay your debts from smallest to largest, regardless of interest rate.
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