Snowball your way out of the cycle of debt
Q EVERY month I seem to be in debt, have you got any quick tips or advice to help me get out of this cycle of endless debt?
A MONEY is highly emotive, and this is especially true when it comes to debt. When you’re in debt it can feel like there’s nowhere to turn and no way out. However, you need to hold a belief that there’s always a way, and that you can become debt free. You need the right mindset and a system that’s been proven to work.
My system focuses on keeping you engaged and feeling good, during the process. It puts you back in control of your money and is called the Snowball System.
Don’t expect to be debt free overnight, it’s likely to take months or even years. Set yourself up to be happy with the process, or you will never stick to it.
You can download my debt organiser spreadsheet for free at warrenshute.com – it shows you how to put all your debts, income and expenditure in a clear format and gets you organised.
The first step is to ensure you’re financially well organised and what’s coming in is more than what’s going out. Aim for a surplus of at least 12.5% of your income – it’s like paying yourself the first working hour of an eight-hour working day. If you don’t have this surplus, reduce your expenditure or increase your income using some of the ways on my site.
This process is part of my Bank Account System which helps people manage their money better.
Now for my Snowball System. Pay the minimum payment on each card or loan you have, then pay your 12.5% surplus towards the smallest balance. All your focus and attention should be on paying that smallest balance off.
Why? To get a quick win, a dopamine boost. When you get that smallest balance paid off, you’ll start feeling good about the process and your progress.
Once your smallest balance is gone, congratulate yourself, then switch focus to your next smallest balance using the same system.
Repeat this and you’ll get rid of your debts one by one, each time feeling that little bit freer.
Momentum is huge in our decision-making, and the Snowball System continuously builds it!