When it comes to debt management, you don’t have to go big to go home. In fact, starting a small debt snowball might be the key to your success. According to an analysis by Chase Bank, on a credit card balance of $2,000 “just by sending an extra $10 for a total payment of $60 instead of the minimum of $50, you could save yourself 11 years worth of payments.” Owe more than $2,000? Use this debt calculator instead. Too many people never start their debt-free journey because they have convinced themselves that they have to make some grandiose gesture before they can start striving for financial independence. This is false.

Related: Here is How Much Home, Car, and Debt You Can Afford on a 30, 50, and $100,000 Salary

I Want to be Debt Free, Where do I Start?

You can start anywhere, but you have to start somewhere.

It doesn’t matter what age or where you start, but you do have to start. The best time to start was yesterday. The next best time is today. There are plenty of talking heads on the topic of debt. I wrote a whole book myself. You don’t have to listen to me or anyone else. You’re on your own journey. If someone’s advice does apply, use it. If it doesn’t, let it fly. What you don’t want to do is keep collecting (or ignoring) information so long that you remain in the same place every year until you become a cautionary Debt Love Story.

A fool learns from their mistakes. The wise learn from the mistake of others.

If you still need a specific number, then start with $10 over the minimum or try saving 1% more than you’re saving now, especially if the amount you are saving now is zero-point-zero. If it sprinkles long enough, it will still flood. Financially speaking, given enough time even a small change in how you allocate your money will have a positive impact on your financial lifestyle. Paying only the minimum payment will just ensure you’re paying off that [insert stuff you probably didn’t need] 30 years from now. If you don’t believe me, read the only the minimum payment box on your next credit card statement.

As an added bonus, I will personally guarantee you that time will pass whether you act now or never. If you disagree, please check in with me 5-years from now to see if 5-years has actually passed. If I’m wrong, I will happily agree to a gentlemen’s wager of one bitcoin.

Should I use the Debt Snowball or Debt Avalanche?

The best plan is the plan that works. Mathematically, the Debt Avalanche will save you the most money. Emotionally, the Debt Snowball is the plan you’re most likely stick to according to science because humans are irrational and on the whole, not very good at math. If we were any good at math we would never use credit cards. Here is a quick overview of the main differences between the two systems:

  • The Debt Snowball: For starters, you need to collect all of your outstanding debt (If you have no idea how much outstanding debt you have, download your free credit reports from AnnualCreditReport.com). Once you’re sure you’re aware of all of your debts, arrange them by lowest balance to highest. Next, pay off as much of the smallest debt each month as you can while still continuing to make at least the minimum payment on all your other debts. Each time you pay off an outstanding debt, roll this payment towards your next smallest debt until you are completely debt free.
  • The Debt Avalanche: The minimum payment rules from The Debt Snowball still apply but instead of making payments by lowest balance, you arrange your outstanding debt by the highest interest rate. In the avalanche system, you pay off as much of the high-interest debt as you can while still continuing to make at least the minimum payment on all your other debts. Each time you pay off an outstanding debt, roll this payment towards your next largest interest debt until you are completely debt free
  • The Debt Who Cares: Then there is my favorite system. The do whatever you possibly can to stop from drowning in debt system (tentative title). In this system, you focus on paying something more than nothing over the minimum payment every month, period. For simplification, as I shared on Forbes.com, I describe this as a 4-step D.E.B.T. plan (D – Define the problem; E – Establish a Plan; B – Build a Budget; T – Trust the process).

Related: D.E.B.T. Free – A 4-Week Starter Kit – a 4-step program designed by Paychecks and Balances, LLC. covering the exact tools and steps we used to become debt free and achieve an 800 FICO Credit Score.

For most people, 80% of their success is stifled by their creative imagination. This means 20% of procrastination is contributing to 80% of your problem. How’s that working out for you? It takes a fairly low-risk tolerance to accept that trying something different will likely have a better outcome than trying nothing. Whether you’re dashing through a debt blizzard of snowballs or avalanches is irrelevant if you’re not at least trying to make progress towards a debt snow clearing. Don’t get caught up in the details. Keep it simple! Any of the above debt payment plans will work fine. They’ll work even better if you choose one and get started. Even an average plan you act on is better than a bad plan you don’t.

From $30,000 in Debt to $100,000 in Savings

There are levels to adulting. When some people first hear the podcast without recognizing we’re over a decade in the career game, they sometimes conclude Rich and I are out of touch. This is a strange conclusion to reach when we all have access to the same Google. Your friend Google would inform you that the current goals we speak of are at least 10-years in the making. We are in a different place now precisely because we started our journey when we were 10-15 years younger. If we were in the same place personally and professionally an entire decade later, we wouldn’t be very qualified to speak about personal finance or much of anything else.

For example, some people think I’m crazy when I tell them my next financial goal is to fund my IRA up to $100,000 by age 40. They are as free to believe what they want as I am to not care. They should know that the math supporting this goal is of benefit to almost everyone who wants a secure retirement. Regardless, that is one of the many great things about putting the “personal” back into personal finance. I don’t need anyone’s permission to set my own goals, and neither do you.

This is one of the few benefits that come with Senior Millenialdom, perspective. After 30 plus years on Earth, I now have the historical evidence to prove I can hit goals I set for myself. I’ve hit them in the past, and if history is any predictor of the future, I will hit some more in the future. I will also miss several goals. That’s life. However, I know that missing goals is not a good reason not to set any goals. For me, not having goals to miss is a greater failure than missing goals I’ve set. In the school of hard knocks, everyone can use a refresher course. That is exactly why we revisit the financial classics every year, like Budgeting for Beginners, Investing for Beginners, and Debt Management for Everyone.

If your own financial house is in order, who cares how I (or anyone) prioritizes organizing their financial furniture? In all honesty, according to Investor.gov, I do need to up my savings rate to 20 percent if I want to reach my goal within the next five years. It’s difficult but improbable isn’t the same as impossible. At least I know exactly what I need to do, and it’s not always about hitting the goal. Sometimes the motivation comes from simply having a big audacious goal to pursue. Further, while I might not be in the greatest of health, I have no plans to die at age 40 so guess what I’ll do if I don’t have $100,000 saved by then? **drum roll** I’ll come up with a new financial goal.

The Bobs today sound just like the echoes of the people from yesteryear who said I couldn’t pay off $30,000 by age 30 either. Maybe the people who think it can’t be done should get out of the way of the people doing it? Standing in the way of progress is just rude, like talking to me in the Uber Pool, and nobody likes that. Collectively, the internet does have a weird money complex: if you’re broke, you’re too unqualified to speak, but if you’re not broke, you’re too unrelatable to listen to. Maybe it’s just the symptoms of more money more problems? Although it’s not like being broke was a walk in the park either. I guess in the end it’s like that one rhythm and blues laureate once lamented, “You can tell me I don’t deserve to ball, but then tell me who deserves it?”


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