Debt Free. It sounds great, doesn’t it?
Being part of minimalist living is recognizing that debt really cramps your style – minimalism style. You need to be debt-free. Get rid of debt!
One way to get out of debt and a distinct variation that I personally used is what is known as an accelerated debt snowball.
Your accelerated debt snowball is a type of self managed debt relief, a method to finally get rid of your financial troubles. Yes, it’s possible and you can almost certainly do it, however much your debt.
The first thing to do is accept that your debt is not going to disappear overnight. It probably took several years to mount up and it’ll certainly take months, perhaps years, to operate it off. Rome wasn’t built in a day. Forget about winning the lottery. If you want to get out of debt you have to develop patience and determination. You also have to prevent using your credit cards.
Next, figure out just how much you have to spend. Take a look at methods to decrease your expenses as much as possible, which in turn, increases your income allowing you to have enough to live on, pay your essential bills and make the minimum monthly payments due. Cut out any repeat billings that aren’t strictly necessary, like gym memberships, magazine subscriptions, daily $4 Starbucks coffee and any additional “luxuries” that you realistically can live without. Make it a point to lower ALL of your expenses. Get your monthly “nut to crack” down as minimal as possible!
Figure out how much you saved by lowering your expenses and use this as your accelerator margin. For example, if you were able to cut down an extra $100 a month (c’mon – it is only $25 a week), then your accelerator margin is $100.
Then, with your new accelerator margin and if you can find anything else extra, start to save. Before you can operate the accelerated debt snowball you should have minimum savings of $500 for a single person or $1000 for a couple or family. This cash is for emergencies – not food or rent, you have to cover those from your income, but for example to repair your car if it breaks down. Like most, you definitely need your car for work to earn income.
The main reason you need this sum of savings is so when an urgent situation occurs, you won’t borrow or use of the money that you’ll require for your monthly obligations.
After this, you can start the accelerated debt snowball. Make a list of ALL of the debts to your name, large and small. Include everything, even $5 that you simply borrowed from a friend they never expected you to repay. Arrange the list so as to how much you owe, lowest first (the total debt for each one, not the monthly payment). Make sure to list it in this order. You should finish up having a list that starts maybe with the absolute lowest amount first and then ending with your home mortgage or whatever is your biggest loan/debt.
Now you will require the accelerator margin and ALL of the spare money you have each month, also known as discretionary income. This is the money that you simply were putting toward your savings before started the snowball and begin to repay those debts, beginning with the absolute smallest on the list. Again, start with the smallest amount of debt FIRST.
Many people will try to start with the highest interest rate debt first. In theory, this makes sense, but it does not work in practice because, as a general rule, people are not motivated by merely saving a little bit in interest charges. We are more motivated by a sense of achievement. This is exactly what we get that whenever we can cross one debt off our list and move to the next.
As you pay off one debt, take the accelerator margin, along with what the minimum payment of that debt was – and add the whole thing to the next debt. So, if one card you had a minimum payment of $100 plus your $100 accelerator margin, you were paying a total of $200 to that card each month. Once it is paid off, move to the next credit card’s minimum payment PLUS that other $200 that you were paying on the other card. This is where it becomes a SNOWBALL.
Paying off the smaller debts first and working your way through the subsequent debts shows that you can do this. Paying off your friend that loaned you a small amount that you keep putting off repaying is rewarding too because they will appreciate the repayment. Heck, they probably never thought they would see the money again. What a surprise. The result of the accelerated debt snowball is to keep you consistently motivated to maintain paying off your debts one by one and having you receive the great feeling of achievement.
To maximize the sensation, make sure to “treat yourself” if you pay off a debt. Don’t allow this treat to be too costly of course, but do something that you will really enjoy. Maybe this is going to the new movie you have been wanting to see or something similar. If you are married and/or have a family, the treat should be for all of you. Make eliminating debt an entire family experience. You all need to be in this together for it to work.
Once you experience the positive feeling of what it is like paying down the initial few debts, you really will never wish to return to having more debt. As they say, “once you pay off the debt, you will never regret!” (Actually, I just made this up – LoL). That’s the reason it’s known as the accelerated debt snowball – you successfully start it and it takes off rolling under its momentum.
Use the accelerated debt snowball to get yourself the very best kind of debt relief. Be debt-free the minimalist way. Become debt free to ensure a minimalist lifestyle.
Less is Positively MORE!™
