Debt Snowball With Landmark National Bank
Debt can be an overwhelming and looming burden, especially if you’re paying it off through monthly minimum payments. To tackle debt more quickly, you may want to employ another method—debt snowball.
What Is the Debt Snowball?
Debt snowball is a term coined for a strategy for paying off debt in a way that allows the amount to shrink much quicker than outlined in payment plans.
How Does the Debt Snowball Work?
The debt snowball works by targeting the smallest debt first. While paying the monthly minimum balance on all other debts, pay as much as possible on this smallest debt amount until it is paid off. Even if it’s not much more than the minimum balance, every penny counts toward a quicker end. Then, once that’s paid off, take what was being paid toward the smallest debt payment and use that toward the next smallest debt in addition to the minimum balance. When this is paid off, add that full amount to the minimum balance payment of the next area of debt. This process continues, essentially compounding into larger and larger payments toward specific debts, like a snowball increasing in size as it rolls down a hill.
How Do Interest Rates Affect the Debt Snowball?
While there may be some benefits to targeting the debt with the highest interest rate first, it can be discouraging to tackle such a large debt from the beginning. As different debts are eliminated in monthly payments, it’s more likely to gain momentum to keep the snowball going. If you’re thinking of employing this method of debt repayment, evaluate the benefits and drawbacks of either order with your own debt makeup.
How Do I Pay Off Debt Using the Debt Snowball?
If you’d like to start tackling your debt using this method, you can use our snowball debt elimination calculator to see how small changes in payments can lead to big payoffs. First, make a list of your various areas of debt and the minimum monthly payments. Then enter these amounts in the order you’d like to target them with their corresponding interest rates. Decide if you’d like to add any extra money to these minimum payments to help build a faster snowball. You’ll then see a graph depicting how your snowball will help you eliminate debt compared to making minimum payments. You’ll even see the expected time frame the whole process will take.
Meet Your Financial Goals With Landmark National Bank
Debt can seem overwhelming, but with a bit of financial literacy, it’s possible to become debt-free. Backed by Bauer Financial’s highest 5-Star rating for financial strength and stability, Landmark National Bank prioritizes your financial success. Meet your goals with the help of dedicated and friendly staff online or in person at one of our many Kansas locations. Get started today!