If you begin with the biggest debt, it’ll take a while for you to feel like you’re making any progress. Chances are, you’ll lose steam and give up before you even really get started. And we don’t want that! With the debt snowball, the quick wins you get in the beginning will light a fire under you to pay off your remaining debts! Knocking out that smallest debt first gives you the momentum and the motivation to tackle the rest.
Trust us, we’ve helped enough people get out of debt to know the debt snowball is the best (and fastest) way to become debt-free.
What Debts Should I Include in My Debt Snowball? Your debt snowball should include all of your nonmortgage debt. (And just so we’re clear, debt is anything you owe to anyone else.)
Examples of nonmortgage debt include:
Student loans Medical bills Car loans
Credit card balances Home equity loans Personal loans Payday loans
Yes, your mortgage is debt too, but you won’t tackle that big goal until later— after you’ve paid off all your nonmortgage debts and saved up an emergency fund of 3–6 months of expenses. (It’s all part of the 7 Baby Steps—aka the fastest way to pay off debt, save money, and build wealth!)
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