Two proven ways to pay off debt. Pick one and stick with it. Fill in your own numbers: this is a worksheet, not financial advice.
Debt snowball
- List every debt from smallest balance to largest.
- Pay the minimum on all of them.
- Put every extra dollar on the smallest balance.
- When it is gone, add its payment to the next debt. The payment "snowballs".
Best for: motivation. You see debts disappear fast.
Debt avalanche
- List every debt from highest interest rate to lowest.
- Pay the minimum on all of them.
- Put every extra dollar on the highest rate.
- When it is gone, roll the payment to the next highest rate.
Best for: paying the least interest overall.
Zero-based monthly budget in 5 steps
- Write down expected income for the month.
- List fixed bills first (rent, utilities, insurance, minimum debt payments).
- Add food, transport and the rest.
- Assign the leftover to debt, savings or a goal until income minus expenses is zero.
- Check actual spending weekly and adjust.
10 ways to find extra money for debt
Cancel unused subscriptions. Call to lower your bills. Sell things you do not use. Cook at home. Use a cash envelope for fun money. Take one extra shift. Pause non-essential buying for 30 days. Use cashback toward debt. Ask for a lower interest rate. Put every raise toward debt.
Starter emergency fund
$500, then $1,000, then 1 month of expenses, then 3 months.
Want the printable planner?
The Monthly Budget and Debt Payoff Planner has the monthly budget, bill calendar, debt list, payoff tracker, savings goals and 12-month overview: https://spectre5.gumroad.com/l/ygesv ($6)
More guides: https://patreon.com/123black
Not sure where the extra debt money comes from? The free 50/30/20 budget check shows your needs, wants and savings split and which category to trim.
To run both methods on your own debts, use the free snowball vs avalanche calculator. It shows your debt-free date, total interest and payoff order side by side.
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