When it comes to debt-free living, I know a thing or two about it. Three years ago, I decided to live more intentionally by practicing medicine on my own terms and in the midst of that, I had an “Aha!” moment: Getting my finances in order is the path to living more freely.
It didn’t take long before I started bulking up on financial knowledge. I began consuming podcasts, books, Youtube videos, and content from Facebook groups of people who were like-minded. Ultimately, I worked with coaches who gave me financial clarity and led me in the direction I needed to go in to achieve financial freedom.
The first step on the path was becoming debt-free. When it comes to paying off debt, I believe there is nothing better than the debt snowball. You’re probably wondering what a debt snowball is so I’ll go ahead and tell you: it’s an effective system used to pay off debt. Here’s how it works:
- List all of your debt
- Arrange your debt in the order of smallest to largest
- Pay the minimum on all debt, monthly
- Use your leftover funds toward the smallest debt
- Once the smallest debt is paid off, use your leftover funds toward the next smallest debt
- Repeat until you pay off all your debt
The debt snowball is about starting small and building up to greater accomplishments. How would you feel if you paid off all your debt, and every month you get to keep your paycheck all to yourself? I bet your answer would consist of “amazing,” or “satisfying,” or “exciting,” or “freeing,” or all of the above!
Some readers may be wondering: “shouldn’t I pay off my highest interest debt first?” Great question. That sounds like an ideal plan, but it rarely works. It turns out that personal finance is more than just a numbers game; because if it were, debt would not exist for many people. However, personal finance is more about money psychology. As humans, we like to do things which wish ll make us feel good; and experiencing small wins by paying off smaller debt makes paying off debt satisfying. Sure enough, I did my celebratory happy dance every time I paid off a small debt.This feeling of enjoyment also acted as a motivator to carry out my plan of financial freedom.
Compare the plan above to the method of tackling the highest interest rate debt (imagine it being 200 times more than the smallest debt) first, and moving at a snail’s pace with paying off your debt. It can be painful, depressing and demoralizing. Many people will not attempt to go on this route because this plan can feel like a drag and will likely deter them from consistently following through with their debt payments. So what’s the best plan to have? The one you will follow through with!
Now it’s time to create your plan of living a debt-free, wealthy life. If you have a 10+ year plan, it can feel daunting; but with my help, we can reduce that time-frame to 2-5 years. Give yourself a head start to 2019!
Are you ready to live a debt-free life? There’s no better time than now. Click this link to get started: Welcome to Financial Life Lounge! A Sacred Hour to Develop A Clear Financial Plan For 2019