馃攳
You'll Never Have Debt Again After Watching This | How To Pay Off Debt Faster - YouTube
Channel: Betterment Boss
[0]
If you have any amount of debt to pay
off you're probably wondering what the
[4]
best debt elimination strategy is that
will get you back in the positive in the
[8]
fastest time for impossible' in the
United States debt has been skyrocketing
[12]
year after year with personal consumer
debt surpassing fourth trillion dollars
[17]
in 2019 which means that Americans could
be doing a much better job when it comes
[22]
to paying down their debts in this video
I'm gonna share with you one of the
[26]
quickest methods of paying down your
debt the debt avalanche method and if
[30]
you're new to the channel hit the
subscribe button below for more
[33]
informative content you're probably
asking yourself what is the dead
[37]
avalanche method do I need to be able to
ski will it be called the debt avalanche
[42]
method is a strategy of paying off what
you owe by prioritizing loans and credit
[46]
card balances with the highest interest
rates you see while it sucks to have to
[50]
look at a huge debt balance every time
you check your bank balance what's worse
[54]
is paying annoying interest charges at
least when you accumulate debt by buying
[59]
goods and services you get value out of
those things but interest charges are
[63]
zero value added expenses therefore the
goal of the dead avalanche is to
[67]
minimize the amount of interest you pay
allowing you to put more money towards
[71]
paying off the principal which in turn
will allow you to be debt-free much
[74]
sooner than if you were to use other
strategies like the debt snowball now
[78]
that you have a good idea of the
principles behind this debt elimination
[81]
strategy let's now get into exactly how
you can set up your debts to be able to
[86]
pay them down as fast as possible step
number one
[90]
let's out all your debts on a piece of
paper or an Excel spreadsheet list out
[94]
each one of your debts from the highest
interest rate to the lowest this could
[98]
include anything from money owed to your
brother to credit card debt and even
[102]
your car loan just to name a few an
important point to note is that you are
[106]
trying to arrange your debts from the
ones with the highest interest rate and
[109]
not the highest interest charge while a
large balance with a smaller interest
[114]
rate may be costing you more money every
month than the one with the highest
[118]
interest rate in principle having along
with the highest interest rate still
[122]
outstanding is the most costly step
number 2 make all your minimum payments
[127]
after you've listed out all your debts
from the highest to lowest interest
[131]
rates is now time to write down each
their respective minimum payments every
[136]
month it is critical that you make the
minimum payments on each one of your
[139]
debts as missing payments will not only
increase your debt but will also affect
[144]
your credit score in fact being just
thirty days later on a payment can
[148]
reduce your credit score by up to a
hundred points making getting a future
[152]
mortgage or even a job that much harder
as a best practice setup a reminder in
[157]
your phone to make each one of your
payments because oftentimes life can get
[161]
busy and having a reminder means one
less thing you have to worry about step
[166]
number three pay down extra on your
highest rate debt now that you've set up
[170]
your debt listing and have made all your
minimum payments it's now time to really
[174]
get the debt avalanche rolling in order
to do this what you want to do is put
[178]
any disposable income you have towards
your highest interest rate debt and if
[182]
you're thinking to yourself I wish I had
extra disposable income then it's time
[186]
to roll up your sleeves and get to work
most people have more free time than
[190]
they think and one of the best ways to
use this time is to make more money this
[194]
could be in the form of taking on more
shifts at work or picking up side
[197]
projects no matter what this extra work
looks like the key is to funnel all that
[202]
extra income towards your highest
interest rate debt allowing you to pay
[205]
it off as fast as possible step number
four keep the avalanche rolling at this
[210]
point you're making solid progress have
paying down your debt by prioritizing
[214]
them and earning extra cash to put
towards them within no time you'll be
[218]
able to stroke off the first debt on
your list allowing you to begin focusing
[221]
your attention on the second one in
order to keep avalanche rolling you will
[226]
need to do three things continue to make
the minimum payments on each debt earn
[230]
extra income and finally add all
previous sets minimum payments to your
[235]
new monthly debt contribution so for
instance if the debt you just paid off
[239]
had a $200 minimum payment you will add
that amount to the minimum payment
[244]
contribution on your next highest debt
creating an avalanche effect of a much
[248]
greater payment and this larger payment
when compounded with extra income you're
[252]
earning will make your debt load
evaporate in no time now let's jump into
[256]
my computer and go over a demonstration
of how this process works all right so
[262]
let's assume that we have some debt to
pay off and the debts are the fall
[266]
we have a credit card debt we have a
personal loan we have a private student
[271]
loan we have an auto loan and finally we
have a medical office bill and the
[276]
balance for the credit card is sixteen
thousand dollars and that one has a rate
[281]
of seventeen percent interest
furthermore we have the personal loan
[285]
which has a two thousand dollar balance
and has a seven percent interest rate
[290]
furthermore we have the private student
loan at thirteen thousand dollars at
[294]
five percent the auto loan at twenty-one
thousand dollars at 4.75% and finally
[300]
the medical office bill is thirteen
hundred dollars and there's absolutely
[303]
no interest attached to it so now let's
say that we have an extra hundred fifty
[308]
dollars available each and every month
to put towards our debt which loan
[313]
should we pay off first well before we
get into that I'm going to fill out what
[317]
the minimum payment is for each one of
our debts and then we'll go from there
[321]
as you already know when you're using
the data and lunch method you're gonna
[325]
want to pay the debt that has the
highest interest rate attached to it and
[329]
any extra money that you're going to put
towards your debt will also go towards
[333]
that balance so in this circumstance we
have the credit card that has the
[337]
sixteen thousand dollar balance and it
has a seventeen percent interest rate
[341]
which is higher than any of our other
debts this means that we're gonna be
[345]
making our minimum payments on all of
our debts every month but when it comes
[349]
to our credit card we're gonna make that
minimum payment of four hundred and
[352]
eighty dollars and then we're gonna add
the extra one hundred and fifty dollars
[356]
to it every single month until it's paid
down now after paying up your credit
[361]
card that minimum payment goes away so
that four hundred eighty dollars is
[364]
going to be gone this means that you're
going to have even more cash flow
[368]
available each and every month to put
towards your debt so the six hundred and
[372]
thirty dollars you are paying to your
credit card company can now go towards
[376]
your personal loan which is along with
these second highest interest rate as a
[380]
result you pay six hundred and sixty
nine dollars and sixty cents which is
[384]
the six hundred and thirty dollars that
you've previously been paying plus you
[389]
require thirty nine sixty as well this
larger payment will have that balance
[393]
paid off in absolutely no time so the
next thing you're gonna do is fold what
[398]
you are paying on a personal loan in
your additional payments so you'll pay
[402]
an additional 669 60 per month on your
student loan the total amount you sent
[407]
to your loan servicer is eight hundred
and fifty three dollars and thirty four
[412]
cents which is a six hundred and sixty
nine dollars and sixty cents plus you
[416]
required a hundred and eighty three
dollars and seventy four cents so
[420]
effectively what you're doing is each
previous payment is being added to the
[424]
minimum payment for the next set you're
paying off and as you continue to
[428]
compound or avalanche your payments
you'll soon become debt free thanks for
[434]
watching if you want to go from the life
you have to the life you deserve then
[438]
hit the subscribe button below
Most Recent Videos:
You can go back to the homepage right here: Homepage