Even if you can find the extra money in your
budget, how do you stay motivated to pay off debt every single month? How can you pay your debt off quickly so you
don’t fall back into that trap? By the end of this video, you’ll have two
debt strategies that will save you thousands and keep you motivated to keep going. In fact, I’m going to show you how adding
just $25 a month to your debt payoff will save almost ten grand in interest and take
years off your payments. We’re talking how to pay off debt quickly,
today on Let’s Talk Money. Joseph Hogue here with the Let’s Talk Money
YouTube channel. I want to send a special shout out to everyone
in the community, thank you for taking a part of your day to be here. If you’re not part of the community yet,
just click that little red subscribe button. Today’s video is the fourth in our debt
payoff series, an entire series on ditching your debt from creating those goals that are
going to motivate you to some tricks I’ve learned to make saving easy. Think of it like a TV series, at the end of
this season, you will have all the tools you need to finally get out from under that crushing
debt. So make sure you subscribe so you don’t
miss any of the episodes. I’ll also be putting these videos in a special
list in the Playlists section of the channel and link to it in the video description below
so you can watch the series in order. At this point, we’ve created those goals
that are going to motivate you and made them real by creating a mental picture. We found an extra $240 a month in any budget
in our last video, now all that’s left is to start attacking that debt. But really destroying that debt is more than
just making extra payments. Before we get to those two strategies that
are going to save thousands and motivate you, I’m going to show you why prioritizing your
debt is so powerful Paying off thirty grand at a 14% rate is going
to cost you $71,520 over 15 years. more than double what you borrowed and that’s
if you’re able to afford the monthly payments and don’t get sucked right back down into
debt again. But playing some games with your debt payoff
can save you tens of thousands and ditch your debt years ahead. Adding just $25 a month to your debt payoff
will save you almost 8,400 and more than two years of payments. Just think of that, for about half the amount
you wasted on that shake weight, you can destroy your debt. Another popular debt strategy is making two
payments a month instead of one. Now this one doesn’t even include putting
any extra money to the payoff. Just splitting your monthly bill in half and
paying every two weeks. That’s going to save you more than $10,700
and over three years of payments. Use the budget hacks we learned in the last
video to pay off your debt faster and you’re looking at saving almost $28,500 and being
debt free in less than six years. Look how that green line, the debt owed, just
plunges. That’s a thing of beauty! So now that you’re excited, you’re pumped
to see those two strategies that will help you pay off debt quickly, let’s get to it. I’ll start with the most popular strategy
first and then talk about my favorite method, one that you might not have heard of. The debt snowball method is more popular and
for good reason, it’s going to save you the most money. But that doesn’t necessarily mean it’s
going to be the best for you. Here’s how the debt snowball method works. You list out all your debts, write out the
amounts and interest rate for each. Then you arrange these from highest rate on
top to the lowest rate. You continue to make all your normal payments
but you make any extra payments to the one or two debts on the top of your list, the
ones charging the highest interest rate. Notice that the list here is only ordered
from highest to lowest rate, amount owed has nothing to do with it. Because you’re paying off these more expensive
debts faster, you’re saving money on that interest. That top credit card debt at 24% is costing
you $300 more a year than the car loan at 9%, even though the amount owed on the car
loan is almost twice as much. Yeah, that means you’ll still have the low-rate
debt like your mortgage on there for a while but you’re getting rid of the debt that’s
really busting your budget. Now I’m big into saving money, I mean this
is a guy that’s wiped his ass with junk mail instead of buying toilet paper, so maybe
it’s going to surprise you to hear that the snowball method isn’t my favorite strategy
to pay off debt quickly. My favorite is actually our other strategy,
the debt avalanche method. Here instead of listing your debts by interest
rate, you list them by amount owed from lowest to highest. With this method, you make extra payments
to the smallest debts first. By focusing on those smaller debts, you’re
going to be paying them off faster. In the snowball method, it might take you
a year to pay off that $3,400 credit card even with an extra $200 a month but paying
off that $2,000 personal loan might only take a few months. Let’s be clear, the snowball method will
save more money paying those high-rate debts quickly but it is so motivating to watch those
debts drop off your list fast with the avalanche method. And when one of the biggest problems for people
in debt is just sticking to a plan and making those extra payments, you need all the motivation
you can get. I would gladly trade a few hundred more in
interest charges for the motivation to keep driving to my debt free. The important point in all of this is that
you keep paying off your debt, you keep that mental picture we developed in the first video
and use it to motivate you to keep saving. I’m excited. We’re just four videos into our debt payoff
course and you’re already on your way to being debt free. Our next video in the debt series is going
to be a controversial one. This is one that a lot of debt gurus don’t
want me to talk about but I’ve used it in my own debt payoff and it can save you a lot
of money. Next week, we’ll be talking about consolidation
loans. How to make your debt payoff more easily manageable,
help increase your credit score and cut out the credit card companies for good. Make sure you click on that subscribe button
so you don’t miss the rest of the videos. Click on the link just below this video to
watch the entire debt payoff plan and get out from under your debt.