A Better Way to Manage Your Everyday Money - Book - Page 234
Making a debt snowball
A debt snowball accelerates the paying off of multiple
debts by using the rollover method. As soon as one debt
is paid off, the freed-up payment amount from that debt
is used to help pay down the next debt faster. The
process continues until all debts are paid off. The debt
snowball is the most cost effective, fastest, and
emotionally satisfying way to get completely out of
debt.
A debt avalanche is a variation of the
debt snowball method. For an
avalanche you pay off the debts
starting with the debt having the
highest interest rate. When the first
debt is paid off, you pay off the debt
with the next highest interest rate
and so on until you are done. The
priority with an avalanche is to save
the most in interest.
In PerNetFlow, you build and configure your debt
snowball in the Debt Snowball window. The first step is
to create a complete list of the debts you want to include in your snowball using the add, edit,
delete, and delete all icons.
As each debt is added, the amount of time it will take to pay off the debt with the minimum
payment is displayed in the Min Pymts column. This information can be useful when deciding
the order in which you want to pay off your debts.
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