What’s The Best Debt Payoff Method

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What’s The Best Debt Payoff Method? – Ep. 147

Want to pay off your consumer debt? In this episode, let’s talk about the best debt payoff method to help you gain momentum and see progress faster. So, here we go!

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What’s The Best Debt Payoff Method

This is the Your Money Your Life podcast. I’m your host Aimee Cerka, a money confidence coach for female entrepreneurs on the path to six figures. After over 10 years in the personal finance industry and multiple personal financial and medical crisis.

I was fed up with the lies that are being shouted from the rooftops by the Gurus. And the media said I help you simplify, solidify and scale your money. By blending tactile money strategies with mindset work, you can create unstoppable finances together, you’ll finally figure out the money thing. So you can make more money in less time without living off of beans and rice, or sacrificing your lifestyle.

Episodes here on the podcast are short and sweet. Being married, having four kids at home, homeschooling being the CEO running the household, I’m kind of busy. And I know you are too. So let’s keep it simple and get to the point. Welcome. I’m so glad you’re here.

Understanding Debt Repayment

What is the best method to pay off your debt? That is the question I want to address today. Before we get to that, though, if we haven’t met, my name is Aimee Cerka. I’m the go to money confidence coach for making money simple, with straight to the point strategies all so that you can make more money in less time.

So what is the best method when it comes to paying off your consumer debt? And this is funny, because when people ask me, okay, maybe it’s not funny. When people ask me what, like being interviewed on podcasts, you know, like, what are people saying when they come to work with me?

This is one of the things that will come up. It’s like, Hey, I’m just I’m so over it. And I need to get out of debt. And we have to impact like all of the mindset, and all the other things around it. But when you get just like tactical, what’s the best debt payoff method?

Now? Yes, we do need to pay off our debt. If you’ve been around for a little bit, you know, that we talk about, like debt payoff is not the goal. And yeah, we’ll just drop “debt” below. And I’ll link you a video that talks about that, why you shouldn’t do that.

Choosing the Right Method: The Power of Debt Roll Down

But we can still be strategic, because we should still work on paying off consumer debt. This is not one size fits all. Of course, this is what we talked about on Tuesday. Debt roll down, though, is my personal favorite. And here’s why I feel like it’s the best. Because it gets you the win, stir. Okay.

And we talk about a lot even when we talk about like why we don’t focus on consumer debt, paying off debt is as a goal. Because we get stuck when are not making the progress that we need to debt roll down does help with that. Okay. Because you see the progress faster.

Here’s how this works, you list out your debts in order from smallest overall debt to largest, okay, and you pay the minimums on all of them. And you focus on paying off the smallest one first doesn’t matter, interest rate, etc. If you get to that are close, pick them with a higher interest rate to pay off first, you know, those type of situations, but you pay whatever you can, if you have extra that you can throw towards your debt, pay it all towards that lowest one.

Creating Momentum

Then when that one’s paid off, you take what the minimum payment was on that account, and add it to the next one. Now, if you’re inside Money Mastery Academy, there is a video where I visually show you how this works. And then of course, you get the worksheet as well.

But then you add it to the next one. Okay, so your minimum payment now that you’re making was what the first account was, and what the second account is, you’ve doubled it, roughly just, you know, numbers, whatever it was and the minimum payment so then you’re paying off that one that much faster.

When that one’s paid off. You move it to the third one. Okay, so now you have the minimum payment from the first one minimum payment for the second one and a minimum payment for the third one. You see how it’s creating that snowball? Is this the popular term for it is the Debt Roll Down, Debt Snowball. Okay?

The exceptions. There’s not really a lot of exceptions. Sometimes when I’m focusing on what debt to prioritize. And again, if there’s two that are close, and I have one that maybe is like medical debt or an interest free debt, I’m going to pay the one that I’m paying interest on first versus the interest free debt paying it off first.

Debt Avalanche vs. Debt Roll Down

But that’s debt roll down and you get the wind faster because you gain momentum, you’re focusing on the smaller debt. And when you see the progress, and that is why debt snowball, debt roll down is so powerful and so effective. Debt Avalanche is another one and essentially instead of ranking from lowest amount of your debt to highest amount of debt, you rank by interest rate, highest interest rate to lowest interest rate.

So then you pay off the loan with the highest interest rate. Well, that payment into the next one. It’s the same type process, but you’re focusing on the interest rates versus the amounts there.

Reason why I don’t love it because again, you’re not necessarily seeing progress faster. And I need you to get the win so you can stick with it. Also, when you’re paying things off faster focusing on the amount, you’re going to make more progress on the interest. Yes, we’re already paying interest to only want to pay more. But that’s your other option.

The Pitfalls of Debt Consolidation

And then of course, debt consolidation is a total separate video, I know that we’ve done episodes on that before. But for most people, debt consolidation is not a good idea, because we have not changed the habits that we’ve made. The habits and the choices that we’ve made to get us to this point, we haven’t changed those.

So when you consolidate your debt, all you do is create another opportunity for you to get into that mess all over again. And that’s what we have to focus on the root of it. Okay, best debt payoff method that roll down slash Debt Snowball, whatever you want to call it. If you have questions, drop them below. We’ll see you next time. Bye for now.

Tailored Support for Your Journey

You’re struggling with shame and guilt around your finances. Whether it’s debt impulse spending mistakes from the past, or the fact that you still haven’t hit your income goal, then it’s time for you to work with me. There are different levels of support and price points that you can use on the path to removing that guilt and shame so you can step into your unstoppable life.

After all, your finances are unique to you and your support should be too good to workwithaimee.com to get started with one of my most popular programs, or you can book a q&a call with me. We’ll figure out what your next step should be. And of course, all those links are hanging out in the show notes as well.

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