In today’s 2 minute Q&A Tuesday, we’re celebrating my family’s 2 year anniversary of paying off over $99K in debt within 5 years. We had one crazy debt-free journey, we cash-flowed our wedding, started a family, dealt with several family emergencies, and started two businesses. I know, it’s not the common debt-free journey, but it made it ours. I’ll be answering how we got into so much debt and what method we used to pay it off.
Face Your Financial Fears
When it comes to your debt-free journey, everyone wants to know if you’re team snowball or avalanche method. We personally couldn’t worry about this beef, as we were dealing with an even bigger issue. I was feeling triggered by my financial fears of losing my career and hitting hard times with student loans. It terrified me that even if we filed bankruptcy that I would one, lose my job, but two still have the student loans. This is wild to me and after discussing with my husband, we decided to attack our student loans first for our mental health.
What’s the Snowball Method?
When we started our debt-free journey of paying off our student loans we didn’t know if we had it in us. We decided to use the snowball method because it actually motivated and excited us to see the quick progress. Our student loans we’re melting right before our eyes, little by little. Now, if you don’t know what the snowball method is. It’s a simple method of organizing all of your debt from smallest to largest, then you pay the minimum on all of your debts. Except, your smallest debt. Instead you go crazy and pay it off as quickly as possible and then work on demolishing your next smallest debt.
This is the most exciting of the methods in my opinion. That alone can encourage you to continue your journey when first starting.
What’s the Avalanche Method?
The avalanche method is a numbers person’s best friend. Why? Because the avalanche method focuses on paying off your highest interest debt first while paying the minimum on all the rest. This method will help you pay off the debt that’s costing you the most to keep. Now, this method could work fine for many if you have about the same amount of debt on all your credit cards for example. Because you would mathematically be paying off the smartest card first. But for most this isn’t the case.
It’s important to be aware of your actual debt and see if this method works for you.
Mix of Methods
For my family, it made more sense to focus on the type of debt that scared us the most. From there we decided which method worked for us and if we needed to make any modifications. Because the truth is, these methods are here to help us pay off our debt. We need to feel free to mix the methods up as we see fit to help us become debt-free.