The Fastest Method for Eliminating Debt: The Snowball Method
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- Опубліковано 17 лют 2022
- You’ve likely heard of the Snowball Method for paying down debt before, but have you ever seen it in action? Join me as I pay my way down through three loans and see just how wicked fast the Snowball Method can zap your debt.
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The mental health satisfaction of the Snowball Method convinces me almost every time over the Avalanche Method even though it saves me less. Can't put a price tag on mental health!
YNAB needs to add the interest feature on loans for credit cards
Debt snowball works. Have an emergency fund of 3-6 month of expense before your start. Then don't let off the gas until you a debt free. It's is possible to have zero debt, trust me.
Also, the wildest part--how much "free money" you'll just have floating around your budget once all of those debts are paid off!! NO BETTER FEELING!!
-Hannah 🌻
Dave Ramsey would be proud of your presentation
Great video! It would be awesome if you could do a video on the Debt Avalanche, which is more motivating for some of us nerdy number crunchers! It's definitely my favorite--or, as the youth say--it's fire ;)
I used the avalanche... What debt?
Yeah, and it's faster because you pay less in the end.
Oh, don't you worry--the avalanche method is comin'!! They're like peanut butter and jelly. Can't talk about one without the other!
-Hannah 🌻
@@YNABofficial Tell that to Dave Ramsey, haha!
@@moderndaymom7024 it's not faster.
In January I was able to throw significant amount at my credit card debt due to overtime at the holidays and an unexpected bonus. This paid off my lower balance card so now in February I will be able roll my old credit card payment in to the higher balance card. I can see a path to eliminating my credit card debt this year.
WOW!! That is the most amazing and wonderful feeling!! I truly hope you're able to knock this debt out before you even know it. You got this, friend!!
-Hannah 🌻
It would be amazing if YNAB could make credit cards work in the loan planner feature.
💯
You can add them as an “other loan” that’s what I did
In one of the budget nerds video about the loan planner feature they make it seem like the credit card aspect is one that they’re working on
I'm a YNAB newbie and I'm devouring these videos like candy! I love the visuals of the icons you have for each line item. How can I add them?
Hey Shanan! It's super easy, I'll link you to a doc that will show you how to do it if you're using a computer! If you're using YNAB on your phone, you can just go into edit mode and add them to your category names.
docs.youneedabudget.com/article/196-using-emoji-in-your-budget
-Hannah 🌻
That loan planner looks like a powerful tool!
Hannah, you're awesome. You always make me laugh. PS. I had no idea about the YNAB loan planner tool! Very cool
Thanks EJ!! And YES, explore that loan planner! We're still making tweaks and improvements to it all the time, so YNAB will only get better and better from here!
-Hannah 🌻
Hi Hannah, love your content and been using Ynab for 2 weeks now and it helps me organise my budget. I just hope Ynab add some of the banks here in New Zealand like ANZ. This will be very helpful. Thanks
YAY!! So glad to hear YNAB's resonated with you. And I hear ya! YNAB is doing our best to expand wherever we can! We finally broke into EU and the UK, which was quite a bit harder and longer of a process than one might think! (Literal years!) One day, I hope YNAB imports everywhere!!
-Hannah 🌻
Blink blink 😳 Snowball (or sneaky Snowbell?) 😆
Ha! Ha! Editing mistake? Me?? Noooo... 😂😬🙃
-Hannah 🌻
Is there ever a time to do both the snowball and avalanche method together I have a small car loan and a couple bigger loans at high interest rates and a small medical loan and 0 percent interest for 24 months
"You're Welcome." 😂
Why doesn't YNAB have these pay off methods included in the app?
They really should.
Love the snowball method but why don't I have those nifty bars in my categories?
They're called "progress bars" and you can turn them on in your settings
It's funny how you say the "snowball method" yet the interest rate shows the Avalanch method!! 😆So, you're kind of showing BOTH!!! And why isn't there a group category that AUTOMATICALLY pops up for loans just like the credit cards group category?
How in the world are you giving financial advice? This could be an absolute disaster. Thankfully in your example, your smallest debt ($500) also happened to have the highest interest rate (18%), and your largest debt ($15k) the lowest (3%). In that case, it makes sense. But what if the interest was the other way around? It would be absolute madness to pay off a debt of ANY amount at 3% if you also have a loan of ANY amount at 18%. INTEREST RATES MATTER IF YOU DON'T WANT TO PAY MORE MONEY THAN NECESSARY TO THE BANK!
But she's explaining the snowball method. You're describing the avalanche method.
@@CCScandalus Thank you for the clarification. I believe she should specify that and acknowledge there's a better way than the snowball method in most circumstances. I say 'most,' because if the interest rates were very similar, it might make more sense psychologically to practice the snowball method-but mathematically, never. Many people aren't going to take the time to do the math for themselves.
Hey Nathan! I'll be covering the Avalanche Method very soon, and I'll make sure to point out what situations it works best for! I was pretty hype on the snowball method at the time, but you're totally right--different methods play out more or less beneficially in different scenarios, and I will make sure to define that a little more clearly! Thanks for the feedback!
-Hannah 🌻
@@YNABofficial Thanks for your reply, Hanna! That would be a good video, especially if you can contrast it with the snowball method to show how much more efficient the avalanche method can be than the snowball.
You have to understand that some people need more motivation to pay off their debt. Some nerdy ppl would do the avalanche method bc they can calculate the interest overall, but personally (back in Sept 2016, I DID NOT have the intelligence and wasn't doing all that math. Some ppl like seeing the visual representation of paying off the smallest, then loan #2, then 3, etc.
Always the happy path! :)
How about a challenge? You lose your job, your spouse loses his/her job, you have a gap in paydays, you secure work but make 10% less AND inflation has made everything 7% more expensive. That $150 you were snowballing is now gone! And, on top of that, several items cannot get funded. What do you do?
Note: This is why almost every friend I have has quit budgeting.
Wouldn’t budgeting be better than not in bad situation?
I’ve been through stuff and budgeting has always helped even when it makes me face a bad situation.
My house burned down 3 weeks ago and I’m so glad I’ve been dutifully YNABing!
See step 6 she references at 5:40
@@aint2proud2meg - I did not say give up. I did say I've had friends give up when they cannot see a way to tackle everything. HUGE difference.
Having personally been in this situation more times than I ever wanted, I've had to "roll with the punches" by not paying any of my debt (they eventually went to collections) and choosing between feeding us and the kids and gas for the car to get to work. The work over the previous 3-4 years to get 30 days ahead was gone in less than 15 days - with no more money coming in. So, donate plasma just to feed the kids, wait on unemployment to kick in, look for work but don't have the gas to drive to interview after interview. Yea - IT SUCKS! And it is very difficult to budget when your (money) tank is empty. Far worse than one possible situation I outlined above.
I've been using YNAB for several years now. It has saved our bacon more times than not. But even with the great job I have I watched as the spare change I used to have every single paycheck completely went negative over the last year. 1 year! And we no longer have any wiggle room unless we go back to top ramen diets. And even then the savings there will NOT cover everything. Rent is supposed to go up by $900/month at the end of our lease - probably even more. (PS: We are moving 300ish miles to get to a lower cost of living area in 2 weeks so that is how we are handling it here. That alone will cut over $1200/month from our living expenses.)
So yes - YNAB demonstrations for when you have several hundred dollars of spare change are awesome! Just not taking into account 2 years of lockdowns and the WORST INFLATION we've seen in 40+ years.
@@shane727 - I am well aware. So tell me, when you have NEGATIVE $150 after budgeting, and before touching debts how do you slow down? ;)
But that's when you need your budget the most in order to analyze your reduced discretionary income and make sure you are squeezing the most out of every dollar while covering all basic needs. 🤨 How are they doing that without a budget?