Snowball Method

Start New Financial presents the snowball method to you with its advantages and disadvantages. Call us TODAY and we?ll make you debt free with a great program.

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What is the Snowball Method?

The debt snowball method is a payment strategy where you eliminate your debts by successively paying off your smaller debts first and gaining momentum to pay off your larger debt. Applying the snowball method strategy eventually helps you become debt free. Paying lower debt first quickly reduces the number of separate debts, thus empowering you with the confidence and focus of debt payment, which in turn also makes you committed to become debt free by tackling larger debt.

The snowball method works very well for some people, you just have to find out if it?s the right fit for you.

How the Debt Snowball Method Works

Debt snowball calculator

The debt snowball calculator helps you calculate all your debt, synchronizing them in order from the smallest to the largest, and indicating or giving you an idea of which debt to pay first. Using the debt snowball calculator, you enter all your debts, including interest rates and minimum payments. You can then see how much money you will be able to set aside for use to eliminate your debt after you proceed to make a budget for yourself. So that your debt payment will be optimum when paying off debt with the funds saved, always try to pay a little more than the minimum amount. You can also try switching between a snowball and a debt avalanche plan to see which will give faster results on settling any debt. The debt avalanche plan is where you start paying off the debt with the highest interest rate first and then the next-highest interest-bearing loan, and so on, and so forth.

It just involves a few simple steps to set up the debt snowball strategy

Organize yourself and focus on the balance of your debts as you start off by making a list of all your debts from the smallest to the largest. To avoid interest payments or additional fees, always pay the minimum payment on all credit card loans. Put any additional money that has been set aside towards the credit card loan on the top of the list. With this technique you will resolve paying off the smaller debt at an accelerated pace. Proceed to the next debt on the list and repeat the same process. As you feel the liberation when you accomplish paying each debt, you will discover that your total payment toward the next debt will grow larger and larger.

Step 1: List your debts from smallest to largest regardless of interest rate.
Step 2: Make the required minimum payments on all your debts except the smallest.
Step 3: Pay as much as possible over the minimum payment on your smallest debt.
Step 4: Repeat this method until each debt is paid in full and you are debt free.

The simplicity of not having to calculate interest rates to see which debt to tackle first and also that you?re able to reduce the number of different, separate debts in short order are the primary advantages of the snowball method. You simply follow the pattern working from the smallest to the larger debt. Once the first debt on the list is paid off, you will feel the positive effect of having achieved a minor triumph that boosts you ahead or forward with the resolve to reach the finish-line goal of becoming debt free. With every small success you will continue to be motivated and encouraged to work on the following debt more eagerly, thus striving towards being completely debt free.

A disadvantage of the snowball method is that it does require plenty of self discipline. You must? actually use the money you have saved up to pay the smaller debts, otherwise you will spend it and wind up with larger debt problems. People with low monthly wages as their income may not have enough to pay off huge loan payments – they must patiently and with great discipline save it up to accumulate it from their meager wages. As is obvious, the larger a debt the more money will be needed to pay it off.

Advantages of Snowball Method

The simplicity of not having to calculate interest rates to see which debt to tackle first and also that you?re able to reduce the number of different, separate debts in short order are the primary advantages of the snowball method. You simply follow the pattern working from the smallest to the larger debt. Once the first debt on the list is paid off, you will feel the positive effect of having achieved a minor triumph that boosts you ahead or forward with the resolve to reach the finish-line goal of becoming debt free. With every small success you will continue to be motivated and encouraged to work on the following debt more eagerly, thus striving towards being completely debt free.

Disadvantages of Snowball Method

A disadvantage of the snowball method is that it does require plenty of self discipline. You must? actually use the money you have saved up to pay the smaller debts, otherwise you will spend it and wind up with larger debt problems. People with low monthly wages as their income may not have enough to pay off huge loan payments – they must patiently and with great discipline save it up to accumulate it from their meager wages. As is obvious, the larger a debt the more money will be needed to pay it off.

Try this method if you deeply value the elimination of the number of different debts

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