play_arrow

keyboard_arrow_right

skip_previous play_arrow skip_next
00:00 00:00
playlist_play chevron_left
volume_up
chevron_left
  • Home
  • keyboard_arrow_right podcast
  • keyboard_arrow_rightPodcasts
  • keyboard_arrow_right Do-It-Yourself Debt Relief Options
play_arrow

podcast

Do-It-Yourself Debt Relief Options

2 Frugal Dudes June 23, 2020 61


Background
share close
  • cover play_arrow

    Do-It-Yourself Debt Relief Options
    2 Frugal Dudes

Episode 185: Learn some effective DIY debt relief options with insight from Todd Christensen, author of Everyday Money for Everyday People and Education Manager at the nonprofit credit counseling agency, Money Fit by DRS.


Why You Should DIY Your Debt Relief

DIY debt relief is nothing new. The Snowball Method and Avalanche Method are two commonly discussed tactics for paying down your debt.

The Snowball Method encourages you to pay off your smaller debts first to build sustainable habits. Once those debts are paid off, you use the money to tackle the bigger debts.

The Avalanche Method takes the opposite approach. It encourages you to pay down the debts with the highest interest first, with the potential to get you out of debt sooner and save you money. However, this can be more challenging from a sustainable habit-building perspective. The Snowball Method is a great starting point, but you should plan on shifting to the avalanche after you find your motivation.

Regardless of which option you choose, taking the DIY approach makes sense. It helps you save fees (or more debt) by hiring a service or coach. It also starts to build those habits and mindset shifts within you for long-term success.

How to Do the DIY Debt Landslide

The Debt Landslide is ideal for anyone who has a major purchase in the near future. The idea is focusing on your debt newest account because the various credit score bureaus weigh your most recent activity over your debt history. By paying down your newest account, you’ll build your credit score faster.

In other words, if you know you’re going to need a loan for a new car next year, start paying down the most recent debt now.

How to Do the DIY Debt Cascade

The other DIY debt payment methods are for those who have a bit of extra money to put toward their debt. The Debt Cascade is for those who are living from paycheck to paycheck.

With the Debt Cascade, you’ll make your minimum payments this month as your baseline. Then, you’ll pay the same amount again next month, even if they say the minimum amount has gone down. Continue this process until you are able to create that gap between what they’re asking and what you have.

For example, if your minimum payment is $50 per month when you get started, it could be $45 next month. Instead of paying $45, pay $50 again and chip away at that debt over time.

Book Giveaway

The first three visitors to Moneyfit.org can use the code 2FrugalDudes to get a free copy of Todd’s book, Everyday Money for Everyday People.

Show Links & Related Episodes


Music: https://www.bensound.com/royalty-free-music

Disclaimer: Kevin and Sean are not professional financial advisors. Do not take any advice they give without first speaking with a professional and performing your own due diligence. This post may include affiliate links.

Tagged as: , , , , .

Rate it
Previous episode
Post comments (0)