Updated: Apr 26, 2020
One of the biggest fears about facing retirement is how to get the bills paid on a reduced income... consistently...every month.
It's a very legitimate fear, but in most circumstances, especially if you have a few years between now and then, there's a way to address it.
The less debt you have as you approach retirement, the less additional income you'll need, right? So one of the things you can start doing right now - and I do mean right now - is executing a brilliant strategy for getting out of debt.
It's called the Debt Snowball Method.
You might be thinking that's a weird name for a debt-reduction plan. And you'd be right if you didn't understand how it got its name.
The first step is to choose the order in which you want to pay off your debts (lowest balance first, highest balance first, highest interest rate first, or a customized version based on your specific situation).
After entering the balances and interest rates on each of your debts (the free version can handle up to 10), the Debt Snowball Calculator figures out the minimum monthly payment for each. Next, you enter the amount of additional money (above the total of the minimum payments for each debt) that you can put towards your debt repayment plan. Maybe it's only $50 per month. Maybe it's more. The point is to pick a number that's manageable for you. You can always add to it when circumstances allow. Once you've entered your monthly debt payment, the calculator does its magic.
Let's say that you can afford to pay an extra $100 per month above the sum of your minimum payments. Once your first debt is paid off, you're still paying the extra $100 dollars - plus whatever you were paying as your minimum monthly payment on the debt you just paid off. Each time you pay off a debt, you're paying the same amount to total debt reduction, but more dollars are going towards paying off the next debt on your list.
In other words, your "debt snowball" gets bigger and bigger as rolls down that mountain of debt... get it? (smile)
The calculator allows you to see your progress in real-time. It also allows you to make an additional payment above and beyond your normal monthly snowball amount when you get that tax refund or mileage reimbursement payment. Conversely, if you had to, you could reduce your snowball payment if you had a particularly challenging month and things would recalculate automatically.
Believe me, the system works... I've used it. As much as I hate to admit it, I had some unexpected medical expenses and home repairs in the past few months so just started using it again.
The best part about the Debt Snowball Calculator is that it's FREE!
To learn more, Dave Ramsey has written a must-read article explaining the Deb Snowball System in that perfect sense way that only he can.
Not convinced yet? Check out this 5-minute YouTube video that explains the strategy and shows the calculator in action. It's free - what do you have to lose other than your debt?
Living our best lives,