The “Debt Snowball” is a conventional means of debt elimination.
Typically, it begins with the consumer identifying all money owed, including credit cards, auto loans, medical bills, mortgages, student loans, personal loans, etc. All debt is then placed in order from smallest to largest and paid off in that order.
This strategy is designed to build confidence, providing little victories quickly in order to ensure you’ll continue down the road to debt elimination.
Rather than sending additional money to all creditors in an effort to pay the debt off quickly, all creditors except the one holding the smallest debt are sent the minimum monthly payment. You direct all available additional funds to the creditor with the smallest debt until it is paid off.
Once the smallest debt is paid, all available additional funds, plus the minimum payment that would have been made to the creditor with the smallest debt (i.e., the debt just paid off) is then sent to the creditor with the next smallest debt. Then, so on and so on until all debts are satisfied.
According to Dave Ramsey, the elements driving the power of the “Debt Snowball” are:
· Getting current on your debt before starting the process;
· The smallest-to-largest pay-off strategy;
· Discipline; and,
· Focused intensity.
While this may be a starting place for many, it requires budgeting and sacrifice. While both of these requirements are tough for most people, they can be followed if the end-goal is near.
However, the conventional “Debt Snowball” fails miserably in one very important respect…
The conventional method allows your dollar to perform only one, single act – your dollar flows directly through your hands to those of your creditors and therefore earns you no savings whatsoever.
Conversely, the unconventional “Debt Snowball on Steroids” method directs your dollar to perform two very important acts on your behalf. First, it allows your dollar to earn compounded interest prior to being “used” to satisfy debt. Then, it allows your dollar to be leveraged to satisfy your debt.
At no time does the dollar used to pay off debt leave your possession. It is always there earning compounded interest year-after-year-after year. And, it will be there even after you have paid off all your creditors, have become financially independent, and are heading down the path to financial freedom.
Don’t believe us?!?
Let The Money Architects at Vivensure® show you how you, too, can employ the “Debt Snowball on Steroids” method. Let us show you how truly powerful your dollar can be…