Are you ready to pay off your debt? Do you want to destroy your debt so that you don’t have to spend your time working hard to just pay bills constantly?
You know that there has to be more to life than just chipping away at your debt. You’re ready to destroy that debt so that you can live your life. You want to pay off your debt so that you can live stress-free and get rid of the anxiety of seeing your credit card bill in the mail.
Before you pay off your debt, you have to find the perfect plan for eliminating your debt. We a look at the Dave Ramsey Debt Snowball Method for paying down debt along with the basic math plan. We’re going to help you find the perfect plan to pay off debt fast.
Here’s the scenario:
You’ve committed to paying off your debt fast. You’re fed up with being in debt. You want to live debt-free with purpose. You want to live life on your own terms. No more random online subscriptions, no more nights out at the bar all covered by your credit card, no more video games, and no more stuff that you don’t need.
You’re in full debt elimination mode. At least you want to be. You’re just not sure which debt payoff strategy to use. You have to decide what your debt elimination plan will be. If you don’t have a debt eliminator strategy then don’t worry because that will all change after reading this post.
We will look at two popular ways to pay off debt fast…
The Dave Ramsey Debt Snowball to pay off debt fast.
The first debt elimination plan I have to cover is the likely the most popular way to pay off debt fast, The Dave Ramsey Debt Snowball Method.
We all are at least somewhat aware of the Dave Ramsey tool for debt elimination from his Total Money Makeover book. You may not have read this book, but you’ve heard of his strategies.
Here’s the Dave Ramsey Debt Snowball described in detail:
- Rank your debt from the lowest to highest balance in terms of how much you owe.
- Pay the minimum payment on all of your debt always so that you can move forward.
- Put every additional dollar you earn or save towards the debt with lowest balance (regardless of the interest rate).
- Repeat this process until you pay off the debt with the smallest balance and can move on to your next debt. You do this until you finally begin to tackle your highest balance and work towards becoming debt-free.
Basic summary of the Dave Ramsey Debt Snowball: Pay off the debt with lowest balance first, regardless of interest rates, for a much needed psychological victory.
The goal here is to build some momentum. When you pay off a balance, you suddenly feel better about paying off debt fast and you should feel more motivated. When you see results, you’re more likely to stay committed to the process instead of giving up. We all know what it’s like to work hard and not see any results. It’s very discouraging.
Why does the debt snowball method work?
According to Dave Ramsey in this article:
“The debt snowball works because it’s all about behavior modification, not math. When it all boils down, hope has more to do with this equation than math ever will.
If you start paying on the student loan first because it’s the largest debt, you won’t get rid of it for a while. You’ll see numbers going down on the balance, but pretty soon you’ll lose steam and stop paying extra. Why? Because it’s taking forever to get a win! And you’ll still have all your other small, annoying debts hanging around too.”
The motivation that comes along with paying down one of your debts can be very remarkable. This will push you to save more money, find ways to make more money, and to pay off your debt fast.
Some respectable personal finance bloggers have argued that Dave Ramsey is brilliant because of this. Then on the other hand, many personal finance analysts are skeptical of this paying down debt option. They argue it makes no sense in terms of dollars and that Dave Ramsey is simply bad at math.
I personally feel that this is a great option if you’re an ultimate beginner to debt reduction and need some sort of psychological boost to get you through the most difficult time (first few months of debt elimination).
We’re are not machines. We don’t always do the most logical thing nor are we always driven by math. We’re rarely inspired by basic math. Yes we know credit card debt sucks, but that doesn’t stop us from using them. We know that the math works against us, but we just don’t feel the motivation.
You’ll pay more in the long run using the Dave Ramsey Debt Snowball, but some of the mental benefits can’t be quantified.
Now it’s time to look at another option for paying off debt fast.
The simple math debt elimination plan.
Is there another strategy to help you pay off debt fast? Yes. You can use the simple math plan.
Here’s this strategy for paying off debt fast:
- Rank your debt from highest to lowest interest rate.
- Pay the minimum payment on all of your debt.
- Put every extra penny towards your high interest debt. The debt with your highest interest rate should be tackled first so that you spend less money on interest over the process of paying down your debt. You don’t worry about the actual balance amount with this method.
- Repeat this process and move on to the next high interest debt.
This is technically the logical approach. You work on the high interest rate debt so that you spend less money on interest as you try to become debt-free. You may not pay off a balance right away, but you’re still going to chip away at your debt.
What’s the best plan to pay off debt fast?
There’s no easy answer here.
Credit card debt elimination is never easy and your progress will feel stagnant when you don’t see any results after a few months.
If you have the discipline and are all about numbers then the paying down your highest interest rate first debt elimination plan will work for you.
If you’re like most of us and need some sort of motivational boost when on the long journey to total debt elimination, the Dave Ramsey debt snowball strategy is for you.
Here are a few other tips to think about as you pay off your debt:
- Always focus on bringing in more money to tackle your debt. The more money you throw at your debt, the better.
- Choose one plan for paying off debt and stick to it.
- Keep on going. Never give up.
Paying off debt isn’t fun but it’s an important step in financial freedom if you want to live a better life. Good luck on your journey to becoming debt-free.
Which debt elimination plan will you follow?