Best Way to Pay Off Debt Fast (That Actually Works)

foreign what's up guys George camel here and today we're talking about the hands down absolute best way to pay off your debt and that is the debt snowball method now people who use this method on average are debt free in just 18 to 24 months why how because it actually works unlike the ice cream machine at McDonald's it's broken so today we're going to go over to the debt snowball method and how it works so you can start knocking out your debt as fast as humanly possible then you'll finally be able to start saving and

investing for your future and who knows maybe one day you'll have enough money to buy your own McDonald's franchise and fix the dad gum ice cream machine what's a guy gotta do to get a shamrock shake with this Happy Meal huh is it that difficult and speaking of happy you know what would really put a smile on this bearded baby face if you just hit that like button share this video And subscribe to this channel so you never miss another one of our delicious MC videos okay I'm I'm I'll stop you can't just add Mick

in front of things okay it's not funny it's childish and it's immature and it's copyrighted McLovin what kind of a stupid name is that Fogel what are you trying to be an Irish R B singer all right there's a ton of conflicting advice out there about the best way to pay off debt some people are pushing debt consolidation which is where you combine your debts into one giant payment by taking out another loan to pay off your existing debts that's a big nope from me nope think about this for a second we're going to use

more debt to pay off debt yeah not a good idea you're just shuffling your debt around okay you're just moving stuff to the junk drawer instead of actually cleaning it out so what you need is a plan to pay that junk off we'll need Bob to voice that [Music] okay a little more than I would have liked but the point was taken so there are two main ways people choose to pay off their debt one is what's known as the debt Avalanche method sounds epic right Avalanche is wrong with the dead Avalanche you pay your

debts off in order from highest interest rate to lowest interest rate regardless of the balance now this might sound like smart math but here's why it's not debt isn't really a math problem is it it's a behavior problem and if you want to change your behavior and get out of debt you need to stay motivated and we're not debt paying robots we're humans we have feelings and faults and the occasional urge to finance a Ford Focus Hocus Pocus there's Pizza on your focus so the way that you pay off your debt has to take this

into consideration and that's why the debt snowball method is the best way to do it like I said earlier people who use this method on average are debt free in just 18 to 24 months and it's not just Dave Ramsey and me saying this it's also researchers from the Harvard Business review this is a proven method that just works okay don't try to fix it it ain't broken so how does the the debt snowball method work well to put it simply you pay off your debts in order from smallest to largest balance regardless of the

interest rate which gives me flashbacks to high school dodgeball because that's the smallest one I was the easiest to take down but I put up a heck of a fight now once that smallest debt is paid off you take that entire amount that was going toward that debt and apply it to the next smallest debt on your list and as you do this you gain momentum as you knock out each remaining balance like a big beautiful snowball rolling down a freshly frosted Hill next thing you know you're debt free so let's recap here's the debt

snowball in four Easy Steps step one list your debts from smallest to largest regardless of interest rate step two make minimum payments on all of your debts except for the smallest one step three throw as much extra money as you can onto that smallest debt until it's gone step four repeat until each debt is paid in full now before you jump in the comments and start yapping about interest rates let me just say I don't want to hear it that's the debt Avalanche method and we've already talked about it again this is not just about

math it's about Behavior about actually following through all the way to the Finish Line you need those quick wins you need that momentum think about it if your largest debt is a student loan with a high interest rate do you know how long it's going to take to put a significant dent in that giant balance and I think it's gonna be a long long time yeah that's right rocket man you're not gonna feel like you're winning for a long long time but when you use the debt snowball method you get quick wins sooner you pay

off that small step super quick you're gonna be jumping up and down like a Trekkie who just met William Shatner at Comic-Con that debt is out of your life forever and that gives you something magical called hope and motivation and progress and then you're on to the next one and the next and the next and suddenly you're putting hundreds of dollars a month toward your debts instead of tiny little minimum payments and trust me when you see that snowball actually working you'll be more likely to stick to it and become debt free faster you see

when it comes to debt payoff you want to be fast and furious but you don't want to Tokyo Drift back into debt the debt snowball method is a Cornerstone of the Ramsay baby steps which is the plan that I followed to go from negative net worth to net worth millionaire when I started this plan I had forty thousand dollars in Consumer Debt between my student loans and my credit cards and after 18 grueling months of budgeting living on less than I made and side hustling and ubering and lifting and selling stuff and eating rice and

beans or in my case Lean Cuisines I paid off all 40 000 of My Consumer Debt using the debt snowball method so consider this a testimonial this stuff works and here's a fun fact if you're using every dollar which is the budgeting app that I use it makes this super easy for you because when you're entering your debts it automatically puts them in the right order for you from smallest to largest one less brain calorie to burn I get a lot of questions about the debt snowball method so I want to address some of those

now in this video instead of replying individually to 158 of you in the comments section question number one what do I do with two payments that have the same interest rate okay easy answer here we're ignoring the interest rate so just pay the one with the smallest balance first you want quick wins here that's what this is about question number two how do I stay motivated when it's taking a long time great question the debt snowball can feel like a grind especially when you're chipping away some of these bigger debts but most people are done

within a couple of years but if you have a lot of debt it could take longer like my friend and co-host of the Ramsay show Jade warshaw it took her and her husband Sam seven years to pay off almost a half million dollars in Consumer Debt but it can be easy to get discouraged when you're eating rice and beans at home while your friends are at Outback Steakhouse stuff on their face with a blooming onion so here's some things you can do to keep up the momentum number one create a visual reminder of your money

goal you can print out a tracker for your fridge put a sticky note on the bathroom mirror make your phone background your debt payoff Journey whatever you need to do keep it Visual and in front of you every single day number two revisit your why you're doing this for a reason so think about that keep that front of mind maybe you want to change your family tree you want to avoid the mistakes your parents made you want to retire with dignity you want to be a homeowner you want to have a family one day and

not be burdened by debt these are great reasons to get out of debt so keep your why front and center third find people who can keep you motivated and accountable if you're surrounding yourself with broke people who don't care about your money Journey are growing that's going to keep you broke so get around other people who are also growing get a friend who wants to budget with you on the weekends get your spouse on board and get them fired up about this join a Financial Peace University class to get around other weird people who want

to stop being normal and broke these are some great ways to get some community in your life and lastly stop comparing yourself to other people and acknowledge how far you've come this is a weird thing you're doing it's a hard thing you're doing so you've got to celebrate the little wins stop comparing yourself to other people and acknowledge how far you've come celebrate the little wins stop worrying about what someone else did and where they're going on vacation and what car they're driving run your own race question number three should I pause my death snowball

if I have to use my emergency fund yes the debt snowball falls into what we call baby step two in the Ramsay baby steps which means you have a thousand dollars saved up as a starter emergency fund to act as a little buffer between you and life and then you move on to debt payoff so if you have an emergency and you've got to use that starter emergency fund temporarily pause the debt snowball just keep making a minimum payments or you rebuild that fund as fast as possible and cover that emergency once you're back to

a thousand restart that debt snowball question number four if I already have money saved should I put that toward my debt snowball love this question so if you've got any non-retirement money saved up let's say in a savings account or you invested in some stocks outside of retirement you should sell those liquidate those and throw it towards your debt everything except that thousand dollar starter emergency fund so if you have twenty thousand dollars liquid cash bring it down to a thousand and throw the other 19 at your debt now notice I said non-retirement funds you

do not want to liquidate retirement funds because those come with a huge tax hit and early withdrawal penalty but if you're worried about liquidating your savings and losing all that hard earned money don't worry we're going to get you back to a fully funded emergency fund of three to six months of expenses once we're out of debt that's baby step three save up an emergency fund of three to six months of expenses question number five if I'm a Christian should I tithe while getting out of debt I believe the answer is and I know a

lot of you are already you run into the comments section going I can't believe he's telling people to give while they're in debt listen if you're not a person of Faith this doesn't apply to you just keep scrolling just fast forward through this question but if you claim that you're a person of faith I think the Bible is very clear that we should be givers that we should be generous now when we're out of debt not while we're in debt just give across the board so when you do your budget if you're a Christian tithe

10 off the top that's your first fruits and then move on and attack the debt and I'm telling you it's not going to hold back your debt snubble all that much but it will change your heart forgiving and that habit will carry on through your wealth building journey and it's going to make it that much richer and that much sweeter all right now that you know the debt snowball method is the best way to pay off your debt no more excuses get that snowball rolling Olaf ah now I'll be honest it won't be a cakewalk

or a walk in the park or a piece of cake come to think of it there's not much walking or cake involved here at all it's gonna take some time and it's gonna take some effort but I've seen thousands of people including myself Crush their debt using this debt snowball method so trust me you can do it and it will be worth it so if you're ready to get started check out our debt snowball calculator you can plug in your numbers and it will show you how fast you can be debt free it'll show your

debt free date yep that's right your debt free day is just as predictable as the plot of a Hallmark movie so I'm going to drop a link to that in the description below and let me know in the comments when your debt free date will be and we'll all celebrate together have a little party as always make sure to subscribe to this channel like the video and share this with your friends who are currently at Outback Steakhouse stuff in their broke face with a blooming onion you'll show them you're gonna buy everyone a bloom in

it you know what a round of blooming onions on you when you're debt free how's that thank you guys for watching we'll see you next time