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Published on March 13, 2019

How to Use Debt Snowball to Get out from a Financial Avalanche

How to Use Debt Snowball to Get out from a Financial Avalanche

Today was a great day. You were productive, spent time with your family, and went to bed on time. You close your eyes ready for tomorrow, only to find yourself awake 4 hours later… This is the time that your brain ruminates your revolving debt as you desperately try to get some rest.

If your financial situation doesn’t change, you know you won’t be able to retire with enough money. You then start to wonder if you’d ever be debt free.

Being in debt is one of the worst places you can be, but you’re not alone.

I and thousands of others have been there. Those who were lucky managed to pay off their entire balances.

You can too. But, you need to take action fast.

The good news is that there are clever ways to be debt free — the debt snowball method. It’s not easy, but if you’re ready for change–here’s how you can get your financial future back in order:

Kickstarting to Get out of Debt

First and foremost, you need to get yourself mentally prepared to before you start your debt-free plan.

1. Commit for a Worthy Cause

There are stories of people having a “magical moment” when they’d decided to become debt free.

The reality is that you don’t need this magical moment. What you need is commitment.

Instead of telling yourself that you want to be debt free, find a reason worth fighting for. Think of what having zero debt would bring to your life.

Would you be able to travel more? Would you be able to sleep better at night?

Despite most Americans carrying some type of debt, having debt isn’t normal.[1] You’ll put yourself in the never-ending “rat race”–living an unfulfilled life. One where you’ll be dependent on a job you hate to sustain a lifestyle you can’t afford.

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By having a clear purpose, you’ll focus on reaching your goal despite the obstacles that come your way.

I’d hit rock bottom when I realized that I was living paycheck-to-paycheck. It was at this moment that I became determined to pay off $6,000 of credit card debt. Because I had a purpose I was able to make an extra $500 principle payment each month–paying off my entire balance off in 18 months.

The same can happen to you, but find a reason worth chasing.

2. Create Your Financial Blueprint

Even after committing, you can still fail at paying down debt.

Why?

Because once you do pay it off, you’d be likely to go back into debt if there’s no direction. It’s easy to stay motivated when you’re first starting off. But, when the going gets tough, it’s here where you’ll need something to keep you motivated.

So how do you stay motivated?

Write down your financial goals. For example, if you want to pay down $3,000 of credit card debt, set a due date.

Bad goal: I want to pay off all my credit card debt

Good goal: I want to pay off my $5,000 credit card balance in 18 months

The second goal is better than the first because you can break it down. You’d need to pay $278 each month to pay off your entire $5,000 balance.

But, you don’t break down a specific goal and forget about it. You need to check on it daily to be sure that you’re on track. A great tool to help you do this is a journal.

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After setting your specific goal, break it down into daily tasks. This could mean bringing your lunch to work so that you have extra money to pay down your debt. Then at the end of each day, check to see if you’ve hit your daily target.

Learning the Debt Snowball Method

Committing to becoming debt free is great, but you need a plan. The debt snowball method is a great place to start.

This strategy boils down to paying your smallest balance first, disregarding interest rate. This is an effective approach because you’ll get momentum going.

For example, if you had $1,000 of debt to pay off: credit card 1: $300 credit card 2: $500 credit card 3: $200

You’d make the smallest payment to credit cards 1 & 2. Then pay as much as possible to pay off credit card 3. In this scenario, it can be tempting to pay the highest balance first.

The problem with paying off your highest balance first is that it’ll take longer. This will increase your odds at giving up because it’ll feel like you’re making no progress at times.

By paying the smallest balance first you’ll get a quick win and stay committed.

So how to use the snowball method?

List all your debts on a spreadsheet. Then figure out how cash you’ll have available at the end of each month using Personal Capital. Get your total expenses and subtract this amount from your monthly income.

    Use as much of this extra money as possible to pay down your debt.

    Unless you have a large debt, don’t worry about accruing interest in your other balances. Pay down your smallest debt, then work towards the next smallest.

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    More important, stop using your credit cards and don’t make unnecessary purchases. Doing this will only prolong the time it’ll take for you to pay down all your debt.

    Should You Use the Snowball Method?

    Many debates whether the snowball method is the best way to pay off debt.

    The answers is–it depends.

    Whatever will help you be debt free is the right choice for you. Using the snowball method carries a cost. Since this method doesn’t take into account interest rates, you may end up paying more in the long run.

    First, calculate how much interest you’d pay to make the smallest payment. If you don’t carry large balances, then it won’t matter how you pay off your debt.

    Another important factor to consider is what will help you be consistent. For example, if you’re someone who needs to get motivation, pay down your smallest debt first. But, if you’re one who likes to be efficient, pay your highest interest credit card first.

    There’s no right way to do this since everyone is different. Paying interest is never a good idea, but if this means that you’d be debt free, go for it.

    Exponentially Eliminate Debt Using an Extra Income

    An issue that most people face when paying down debt is the rate at which they do so.

    The only way to change this rate is by decreasing your expenses or increasing your income. The problem with decreasing your expenses is that you can only do it to a certain point. But, increasing your income is limitless.

    Still cut your expenses as much as possible using tools like Trimm and BillCutterz. Once you do you’re ready to increase your income. Starting a side-hustle is the best way to do this.

    Great side-hustles to start are:

    1. Freelance writing[2]
    2. Affiliate marketing
    3. Start a blog[3]

    None of these side-hustles are easy to create. But, once you earn income from a side-hustle your finances will improve.

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    Whether you love your job or not, having a side-hustle is a great way to pay down your debt faster. You’ll also feel confident knowing that you’re not dependent one income.

    Bonus Strategies to Crush Debt

    The debt snowball method is only one of the many ways you can pay down your debt.

    If you carry a large amount of debt, then you need to explore your other options. Other options include consolidating your debt for a lower interest rate.[4] For example, if you carry balances on many credit cards, you can combine your debt into one single balance.

    Be sure to review your financial goals before making this decision. Credit card companies will offer a 12 to 18 zero interest promotion. Afterward, the interest rate will spike. This can do more harm than good if you’re still carrying a large balance after the promotion is over.

    Like balance transfers for your credit cards, you can apply for a personal loan. Here you’d combine other types of debt you carry into one single loan. This helps you save money on interest and makes your monthly payments easier to make. Crunch your numbers to be sure that you’d be saving money.

    Final Thoughts

    “The best time to plant a tree ”is or was“ was twenty years ago. The second best time is today.” – anonymous

    Imagine going to bed and not worrying about money. You’d have zero debt and better money habits. You’d sleep and feel happier.

    Wouldn’t you want this to be your reality?

    The truth is that such a reality can be yours, but you have to be willing to pay the price. It will take hard work and sacrifice to pay down all your debt. And, despite being on track setbacks are inevitable.

    You already know about a few debt strategies you can use to crush your debt. But, you first need to commit. Then, set clear financial goals and take action.

    Social pressure and other factors led you to accumulate a lot of debt. Although you’re not where you’d like to be today, you can still change your financial future for the better.

    Life is too short to let financial setbacks stop you from being happy. Now go crush your debt. A happier life, one with better sleep awaits.

    More Resources About Financial Management

    Featured photo credit: Jack Harner via unsplash.com

    Reference

    More by this author

    Christopher Alarcon

    Content Marketer and Finance Analyst

    20 Better Money Habits to Help You Increase Your Savings The Average Retirement Savings and How to Save Wisely How to Invest for Retirement (The Smart and Stress-Free Way) The Savvy Employees Guide to Asking for a Raise How to Use Debt Snowball to Get out from a Financial Avalanche

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    Last Updated on July 4, 2019

    25 Killer Sites For Free Online Education

    25 Killer Sites For Free Online Education

    Whether you’re five or ninety five, the internet has a lot to offer. Particularly when the topic is education, the resources on the internet are endless.

    Best of all, many high quality sites are completely free. From history to coding, excellent free online education awaits on the following 25 sites.

    1. Coursera

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      Coursera is a website that partners with universities and organizations around the world. This brings a wide variety of topics and perspectives to one searchable database.

      Coursera is a powerful tool for free online education, and includes courses from many top universities, museums and trusts. This gives the site an extremely wide range of in-depth courses.

      Coursera is extremely useful if you’re looking to study many different topics, or want courses from different schools and groups.

      2. Khan Academy

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        Partnering with many post secondary schools, Khan Academy offers a useable, well organized interface. Also curating many courses from around the web, Khan Academy offers impressive depth on many different subjects.

        Among the more well known educational sites, Khan Academy is also incredibly useable, which may make it easier to keep learning goals.

        3. Open Culture Online Courses

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          If you are struggling to find exactly the material you are looking for, try Open Culture’s listing of free online education courses. The page highlights 1000 lectures, videos and podcasts from universities around the world. The site features a lot of material found only on universities private sites, all in easy to browse categories. This means you can find hundreds of university courses, without having to visit and search each university’s own site.

          Open Culture’s list features courses from England, Australia, Wales and many state universities around the United States. A very helpful resource for finding many courses in one area of study.

          4. Udemy 

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            Udemy’s free courses are similar in concept to Coursera’s but additionally allows users to build custom courses from lessons.

            Working with many top professors and schools, the site mixes the customizable platform of other sites with a heavy emphasis on top quality content. This is another site however, that mixes free and paid content.

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            5. Academic Earth

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              Another site with courses from many different schools is Academic Earth. Much like the three sites above, Academic Earth brings together top notch courses from many different sources, and focuses on offering a wide variety of subjects.

              Academic Earth lists courses by subject and school, so it might be easier to find what you’re looking for.

              6. edX

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                Another great option for free online education is edX. Also bringing together courses from many different schools, the site has impressive, quality information for everyone. edX covers a great range of topics.

                7. Alison

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                  Unlike the previous sites on this lists, Alison is a free education site offering certification in some areas. Alison offers courses mainly in business, technology, and health, but also includes language learning courses.

                  It’s a great option if users need certification for their learning as Alison also offers school curriculum courses.

                  8. iTunesU Free Courses

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                    A very convenient place for free online education is iTunesU, because it integrates seamlessly with your iPod, or any app-ready Apple mobile device. On iPad, iPhone, or iPod touch, users download the iTunesU app.

                    Desktop users can access  iTunesU on the upper right hand corner of the iTunes Store. iTunesU is also convenient because the store is categorized much like iTunes.

                    Users can search learning materials in many different ways, including genre and topic. However, courses are often a mix of free podcasts or videos, and paid content.

                    ITunesU does include courses on a pretty wide scope of topics, but does not integrate with Android, Google or Windows mobile devices.

                    9. Stanford Online

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                      Your hub for all the online offerings from Stanford University, Stanford Online offers self-paced and session based courses. While Coursera features some courses from Stanford, many classes are only available via other hosts. Some courses require iTunes, but most are completed in your web browser.

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                      Stanford Online is a great site for high quality courses, though the topics are somewhat limited compared to sites partnered with more than one school.

                      10. Harvard Extension

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                        Like Stanford Online, Harvard Extension features free online education courses from Harvard only. This is another excellent source for top notch course material, though the course variety is less rich than multi-school sites.

                        Additionally, Harvard Extension allows you to search for courses by professional certificate. This makes it much easier if your online education goal includes certification.

                        11. Open Yale Courses

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                          Open Yale Courses echoes Harvard Extension and Stanford Online, in that it offers only courses from Yale. While the site is similarly limited to topics taught at the school, Open Yale Courses offers a lot of videos of actual campus lectures. The availability of videos makes the site a great option if you’re looking for quality courses, but learn better by watching than by reading.

                          12. UC Berkeley Class Central

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                            Much like the other schools on this list, UC Berkeley has a variety of free online education options. The school has slightly fewer courses than the schools above, but includes some supplementary lectures, webcasts and RSS Feeds, making it easy to keep up with the topics you choose.

                            13. MIT OpenCourseWare

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                              Similarly, MIT offers a variety of free courses. The school has a comparable number of courses to the schools above, plus includes very in-depth course materials on the subjects available. MIT also offers free RSS feeds, a convenient way to continue learning.

                              14. Carnegie Mellon Open Learning Initiative

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                                Carnegie Mellon’s free online education site is comparable with the other school’s on this list, however, Open Learning Initiative also covers a smaller range of topics. But for the topics that are covered impressive, in-depth material is available.

                                15. Codecademy

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                                  Codecademy is a website dedicated specifically to teaching coding. Where other coding sites follow an example/practice session workflow, Codecademy includes a live practice window. This means you can practice coding while still viewing the lesson material.

                                  The courses at Codecademy are well written and easy to follow and the website is organized very nicely. Codecademy features a centralized dashboard where you can monitor your progress, plus organizes lessons into complete modules. This lets you learn an entire language without needing to pick the next course manually.

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                                  16. Code

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                                    Code is another website focused on coding and app writing. A site with high quality courses, Code also features learning options for kids.

                                    In addition to kid friendly courses, Code offers free online education classes on a wide variety of technology topics. These classes include app writing, robotics and Javascript.

                                    Most of the courses are also geared in a such a way that they can be useful in a classroom setting. This makes Code a great resource for harder to find coding topics, as well as various learning settings.

                                    17. University of London Podcasts

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                                      The podcast page on the University of London website is another great source for free education. While the courses are limited to podcasts, the site features podcasts from it’s own campus, as well as eleven universities in and around London. This gives learners a wide base of topics and lectures, but still ensures in-depth material.

                                      18. University of Oxford Podcasts

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                                        Similar to the University of London, the University of Oxford features many different podcasts. Most are public lecture series or lectures from visiting professors, with several different recordings available.

                                        The advantage to this particular site is that podcasts are organized into series, making it easy to subscribe to multiple lectures on one topic. Another good site for thoroughly in-depth lectures.

                                        19. BBC Podcasts

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                                          For the more casual learner, the BBC offers a wide variety of podcasts on many different topics. Most podcasts are updated weekly, and focus on everything from finance, to sports, to current events.

                                          Through the World Service line of podcasts, there are also many in different languages. The focus of these podcasts are less in-depth and theory based, which may be more accessible to the average person.

                                          20. TED-Ed

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                                            Another great destination for more general learning is TED-Ed. From the same people that brought you the all encompassing, motivational web series, comes a site chocked full of educational videos. Most include impressive animation, and all are ten minutes long or less.

                                            Not only is TED-Ed an excellent site for the curious, it also includes supplemental materials and quizzes on the videos. This makes the site extremely useful in formal education settings, as well as in entertaining ways to brush up on new discoveries and topics.

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                                            21. LessonPaths

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                                              LessonPaths is another great tool for those looking for a more usable and convenient way to access learning material. On this site, users create link playlists of their favorite learning materials from other sites. Users then rank these collections, making it easy to find many different high quality, accessible sources on a given topic.

                                              22. Memrise

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                                                Another impressive free online education site offering ease of use and convenience is Memrise. Available both on desktop and as an app, Memrise is a particularly powerful tool if you are studying a language. The site encompasses many other topics as well, though some of the course material is user generated content.

                                                Part of what makes Memrise special is their integration of games into the learning materials, mixing learning with entertainment.

                                                23. National Geographic Kids

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                                                  The kids site for National Geographic is another site that makes free online education applicable for younger users. For those looking for kid friendly education, a large variety of games, puzzles, videos and photos keeps kids interested on this site.

                                                  National Geographic Kids doesn’t organize learning into courses, making materials available by topic and medium instead. This makes National Geographic Kids a good option for those looking for a more casual learning environment.

                                                  24. Fun Brain

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                                                    Fun Brain is another good option for kids who want to learn online, but focuses on games and fun puzzles. Particularly focused on math and reading, Fun Brain’s game based approach can be valuable if the child in question struggles to pay attention.

                                                    Fun Brain offers rewards and challenges as well, and is another site aimed at a casual learning experience for kids K-8.

                                                    25. Whyville

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                                                      Similar to the sites for kids free online education is Whyville a destination for preteen online learning. The site includes a variety of social features, with a focus on learning materials geared for young teens.

                                                      Whyville also mixes in educational games, to make the site a well rounded option for kids too old for simple games, but too young for heavy reading based material.

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                                                      Featured photo credit: Dai KE via unsplash.com

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