How To Pay Off Debt

Interest on debt – feels like a death walk!

My dear 40-Forwarders, ain’t this the truth?! You already have this huge sum to pay and then interest (extra burden and stress) is being added. Interest payment is robbery. In Jamaica we would say, “Ole dung an tek weh.”

In 2021, let us get this monkey off our backs and this thief out of our pockets.

My dears, remember we are not in the shadow boxing business so reach for that notepad or iPad and write down:

• The amounts you owe
• Who you owe
• Interest rate
• Payment amount

There are two (2) main schools of thought on how we will now tackle paying off these documented debts:

Snowball Method vs. Avalanche Method

In the Snowball corner we find Dr. Lynn Richardson. And in the Avalanche corner we find The Budget Mom (TBM). So what is the difference?

SNOWBALL: Pay off your smallest debt first. Take the amount you use to pay on that debt and add it to paying off your next lowest debt. Then when this is paid off, take the amount you were throwing at the last pay off and put it towards the third debt in line. Get the picture? For every debt you pay off, you are gathering momentum for the next the next debt on the list and your debt pay off gets bigger and bigger as you go along – like a snowball.

AVALANCHE: Pay off the debt with highest interest rate first thereby bringing down your debt faster – like an avalanche! The idea here is to, in the avalanche, bring down the amount of interest (extra money) coming out of your pocket. This savings amount is thrown at the next “heavy” interest debt (additional tremor) to get it to tumble down.

The first school of thought – snowball – wants us to be encouraged by our small wins, build momentum, and keep it moving. While the second school – avalanche – says, let’s kick the legs from under debt, let’s take it out swiftly.

So which corner are you in Rona V.? I find myself in the Avalanche corner because I hate usury! Say what now? Extra burdensome payments (interest).

But I say to you, pick the corner that best fits your context OR mix it up. What if you have small amounts owing on one or two high interest debt, then why not pay that first? Then tackle the remainder using the snowball method.

Now, our mortgages are usually not included in these two payoff strategies. Keep making those consistent mortgage payments. When you are through paying off all these other debts, using whichever Method suites you best, then take those payment amounts and start chipping away at your mortgage principal wall. 😉

An important part of the debt payoff strategy is monitoring and measuring (you know I will find a way to squeeze in some quality speak).

Do your quarterly review (after all, you do mean business).

• Did you meet all your payments?
• Were you able to throw extra at your debt?
• If yes, where did it come from?
• Is this “extra” one-off or inconsistent-consistent income stream (eg, commissions)?
• Do you need to make changes in this upcoming quarter?

You choose your review cycle. The important thing is, make sure reviews are done.

40-Forwarders (& Youngins), let’s stop the haemorrhaging and the robbery by launching a strategic and focused assault on our debt. In the process, the aim is not only to get out of debt, BUT to stay out of debt. We are going to learn (together) winning money habits!

“Debt, you had us down for awhile, but we are coming out and up!”

Go ahead and put it on your Plan – pay off debt. Don’t have one? Rona V. got you – CLICK HERE 😉

You already know the

WHAT: Pay down (and off) debt

WHY: It’s a robbery and a burden – amount owed+interest – and I want FREEDOM

simplyronav.com

Are you already on the debt payoff journey? Drop some nuggets and share some of your successes and perhaps what did not go so well in the Comments. And of course, share, share, share!