Immediate results are likely to be helpful to those who have large debts that will take a long time to pay off. Since some of us can have thousands of dollars in debt through student loans, high interest credit cards, and more - this step stops the interest from piling up.ĭave recommends tackling the smallest debt first whether this is a credit card for $200 or a piece of furniture you put onto a payment plan.įor those who need it, seeing the debt gone can bring huge motivation to carry on the challenge and really hone in on their debt snowball. To get started, use my budgeting 101 guide.īaby Step 2: Pay off all debt (except your mortgage) using the debt snowball methodĭave recommends a specific method for paying off all your debts. Tip: A great way to prep for the baby steps or any financial plan, is to ensure you have a simple budget. $1,000 sets you in good standing to then move on with the other baby steps, knowing you can afford to continue with them even if something unexpected occurs, like a water heater breaking. It is crucial to get this amount saved as soon as possible, even by cutting your usual expenses for a few months to get there.ĭo this by cutting your subscriptions, meal prepping, or even sell your unused items (like vehicles if possible). ![]() Unfortunately, unexpected expenses happen and can put a real dent in our finances, so having an emergency fund can come in handy.
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