Did you know you can save months by paying
off your credit card debt by using the right strategy? By the end of this video, you’ll know which
strategy is right for you. We’ll be covering debt Snowball, debt Avalanche
and debt Tsunami. We’ve crunched the numbers of all three, to
give you the best one. So what are these three strategies, to paying
off your credit card debt? The first one, and made popular by Dave Ramsey,
the debt Snowball. And this is based on paying off your lowest
balance first. So whichever credit card has the least amount
on it, that’s the one you go for first, doesn’t have anything to do with interest rate, it
is purely a psychological method because it gives you a quick win from the beginning,
so you can see that debt gone. And this is the one where you actually pay
the most interest in the long run and it’s the slowest way of paying off your credit
card debt. So the second method is the debt Avalanche
and the debt Avalanche, I’m not sure who coined this strategy, but whoever it was, was good
at math. So this is a mathematical base principle,
instead an emotionally based principle. This looks at your highest interest rate credit
card first and that’s the one you’re going to attack first, and that helps reduce the
amount of interest you’re going to pay and you can pay off your debts once faster than
using the debt Snowball method. And the third one is debt Tsunami and this
one is based on paying your most emotional debt first. So if you have a debt to a family member or
a friend that is really weighing on you that makes you worried, it keeps you up at night,
this is the one you pay off first and this method helps you to overcome that emotional
barrier right away and then after you pay off the most emotional debt first you go to
the debt Avalanche where you pay off the highest interest rate. So we wanted to give you a sneak peek into
our fourth method, which is, what I mean how I teach our clients and people who are join
our course and it’s like a debt Avalanche but with a little bit of twist and we haven’t
named it yet, but maybe we should call it the debt Tornado, because they’re all crazy
weather-related, so we might as well keep with the theme. So what does the debt tornado entail basically
like I mentioned it’s the debt Avalanche with little twist. So a lot of these strategies, their very first
step, like Dave Ramsey’s baby step number one, is to save up a thousand dollars in your
account as an emergency fund. We don’t agree with that, and we know that’s
pretty controversial, but I’ll explain you why. If you have a thousand dollars, saved up in
a savings account, earning you one percent interest, but then you have 10 000 dollars
and a credit card balance that has an interest rate of 30%, you could take that thousand
dollars and knock out some of that debt and stop paying interest on that thousand dollars,
or you can keep it in this account and that will help you from putting more money onto
that credit card, but I’d rather pay that 10 000 to 9 000 and maybe go back to 9 500
and then just keep paying it down instead of keep a thousand dollars here and then keeping
interest on 10 000 dollars. Speaker 2 : And the purpose of the Dave Ramsey
Snowball method, is to fell like you got a win and you’re making progress. But with our clients, we’ve been able to
show them through visual methods, using spreadsheets and graphs, that they are making progress
even when they have unexpected expensive and hiccups come along. So it’s really all about tracking, and if
you want to download our ten minute money checklist below, that is exactly what we do
every week to check in with our money and to make sure we are staying on track and making
progress to achieve our goals. Definitely. Mindset is super important, so when you’re
tackling one of your debt by one of these mathematical principles like the avalanche,
or what me and Allyson teach, is really important to make sure you have that set up front so
our money the checklist really helps with that and with our clients and coaching students
we go through a whole series of exercises and things like that to uproot limiting beliefs
and make sure your money mindset is in the right place so you can really jump in and
budget and pay down debt effectively and stay on track. So what’s the benefit to not keeping that
thousand dollars in your bank account from the numbers we’ve crunched and we have a
spreadsheet we’ll go over in a lot more detail in another video, just kind of showing
you how this method plays out with the numbers, we have shown that you can pass your debt
10 to 20 percent faster than the debt Snowball or debt Avalanche. So you can shave off months, to even years
depending on your personal situation. So, if you want to see more in depth deconstruction
on our debt Tornado strategy, how it can save you months and thousands of dollars off of
paying down your credit card debt make sure to hit subscribe and leave us comment, saying
debt Tornado, because we just coined that phrase right here right now and we will post
that video next week for you guys to make sure that you understand it fully and you
can apply it today.