The debt snowball method is an effective way to pay DOwn debt until you’re finally debt-free. But do you think there are reasons to Pause Your Debt SNOWBALL?
The well-known debt snowball method suggests listing your debts in order from the smallest balance to largest balance. Then you throw extra money—”the snowball”—at the smallest balance while making minimum payments on the other debts.
After crushing that first debt, you roll over that payment into the next one on the list. The snowball gets bigger and bigger with each debt you eliminate.
By the time you reach the final debt with the largest balance, you will have amassed a giant snowball that will help you crush that debt faster than you initially imagined.
That good ol’ debt snowball is hard to stop when it gets rolling. But there are times when it’s perfectly fine to press pause. Really, it is.
We can get tunnel vision when focusing on a goal, but life happens and we must reconsider where to put our energy and our money.
7 reasons to pause your debt snowball
To pause your debt snowball means to continue making minimum payments on your debts, but putting any extra money toward other goals instead of making extra debt payments.
For example, you’ve been putting a combined $500 towards debt payoff each month: $300 to cover minimum payments and $200 toward your Visa credit card (the debt with the smallest balance). When you pause the debt snowball, you continue paying $300 to cover minimum payments and put that $200 towards another goal, which will be explained below. After you reach that short-term goal, you start paying $200 extra each month to Visa again.
The main reason to pause your debt snowball is to avoid going deeper into debt. Here are specific scenarios that fall under that umbrella.
1. you can’t cover your basic needs.
Stop everything! The debt snowball should not be a priority at the moment. Your mission is survival. This should go without saying, right?
Please just pay the minimum on your debts until you can cover your basic living expenses— rent/mortgage, utilities, groceries, gas for the car, etc.—with ease. Then you can reintroduce a little fun to your budget, e.g. occasionally dining out and a Netflix subscription. Having a little fun is crucial for your happiness.
After that, you can restart the debt snowball. I know it sucks to not be able to crush debt like you want, but it’s better than not having a roof over your head or food in your belly.
If you can’t make minimum payments on your debts, then please pick up the phone. Call your creditors and try to work out something. Who knows? They might put you on a lower payment plan, move your payment date back, eliminate fees or let you pause payments due to hardship. They can’t help you if you don’t alert them to your situation.
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