All products, services, or links mentioned on my website are for products and services that I have personally used and/or recommend. Some of the links are affiliate links. This means if you click on an affiliate link and purchase an item, I may receive an affiliate commission at no extra cost to you. All opinions remain my own.
Are you in over your head with debt? Is your vacation rental under water? There may be a solution by using the Debt Snowball method for debt payoff.
It was just recently that I heard about the debt snowball method for paying off debt quicker. Let’s take a look at how you might be able to retire sooner by using this method of debt repayment.
I’m 40-something and it gets me to thinking more and more about retirement. As vacation rental owners, we hope that some day we will be able to retire to our vacation destination utopia and live happily ever after.
But when? …and, the bigger question – HOW?
Recently, I was talking about this with my aunt and she was telling me about a Facebook group she joined – ChooseFI.
Well, I had to ask the same question.
Hmmmm, that sounds like something I should check into, and I did.
Turns out, not only is there a Facebook group, but there’s also a Podcast (also called ChooseFI) and a website. There is a TON of great information, so be sure to check it out.
Apparently FI isn’t a new concept, so now the pressure is on to get caught up on how all this works, put the processes in place and MAKE IT HAPPEN!
So, I wanted to share something with you that I found while doing some research on FI.
This is where you pay extra (even a little bit) towards one of your existing loans. As each one gets paid off, you apply that old payment towards the next loan.
You’re essentially chipping away at paying off your loans faster, which saves you hundreds of dollars, or even thousands, in interest expense.
There are a few ways to do this. You will need to assess your specific situation to see which one works best for you.
Pay extra towards your loan with:
Loan Monthly payment Balance Interest rate Remaining Term
Car loan $500 $25,000 2.9% 54 months
House loan $1,200 $125,000 4.5% 133 months
Credit cards $150 $8,000 15% 89 months
Making the minimum payments, you would pay back a total of $ 40,742.79 in INTEREST and it would take you over 11 years to finishing paying off all of these loans.
By using the debt snowball method and applying only an extra $50/month towards your loan, you can pay back all of these loans in only 101 months (nearly 3 years sooner!). You’ll save over $7,000 in interest!
For example, using the “smallest balance” debt snowball method, pay an extra $50 towards the credit card balance. You will have it paid off in 55 months instead of 89 months (2.8 YEARS sooner!). Then, at month 56, your credit card bill AND your car loan will be paid off. Next, apply that $700 extra towards your house loan and it will be paid off in month 101 instead of 133 months (5.6 YEARS sooner!).
It is AMAZING what just $50 extra
per month will do to
help you save money AND
get you out of debt a whole lot sooner!
Imagine what you could do if you applied an extra $100 or $200 per month towards your loans! Just $50 per month gets you to being Financially Independent 5.6 years sooner!
THIS is what I wanted to share with you – the really cool online
that will help you figure out which method is best and shows you exactly how to make it happen!
Try this calculator and watch the magic happen. I couldn’t believe it until I tried it. They have several other useful calculators on the website – debt, investment, savings, retirement, etc.
I had been putting $300 each pay day into a savings account, which is earning .0025% interest – stupid! I am now applying that extra $600/month towards a loan and we will be able to pay off our loans 8.5 YEARS sooner!
And if you haven’t signed up for an Ebates account yet, what in the world are you waiting for? Get cash back on nearly every online purchase you make. Last month I received a check for $33.49. I have $67.56 built up so far with my online Christmas shopping and that check will be mailed in February. 
Sign up using my link and you’ll get $10 from Ebates once you spend at least $25 and I will receive $25 for the referral! Once you’re signed up, refer your friends and you’ll get $25 for each referral. Use that $25 towards your monthly loan payment and you’ll be even closer to financial independence. Small amounts add up! Try it!
I’d love to hear how you are working toward being Financially Independent. Share your secrets, tips and tricks in the comments below.
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2 Comments
Great tips Connie. Paying off bills each month is one of my ways to beat back that snowball!
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