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How to CONQUER Your DEBT and Gain Financial Freedom

April 16, 2024
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Paul Roux
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Paul Roux

Choose Your Debt-Smashing Strategy: Snowball VS Avalanche



Why Debt Sucks:

  • Limits your freedom and flexibility.
  • Adds stress and anxiety (finances should be a source of comfort)
  • Interest expense = less disposable income

 

Assets vs Liabilities

Debt leaves us with less money for ourselves, our lifestyle, and our investments. Lets define:
- ASSETS: Generates passive income and increases our ability to create wealth.
- LIABILITIES: Generates passive expenditure and decreases our ability to create wealth.

 

Methods to Conquer Debt

To conquer debt, we have two powerful methods: (See Imagine)
1.     The Snowball Method
2.    The Avalanche Method

The Snowball Method works by repaying the smallest debt first, creating an accelerating snowball effect. As each debt is repaid, add that extra cash to the next one on your list.

The Avalanche Method focuses on repaying debts with the highest interest rates first. It involves prioritizing our most expensive debt first.

 

Which method is best?

Technically, the Avalanche method is superior for saving money, but it might not be the best choice emotionally. Debt is not just about numbers it triggers powerful emotional responses. The Snowball Method can be more appealing as it builds motivation with each debt paid off.

 

If you are looking for someone to chat with regarding your finances and/or investments - send me a dm or contact me at 0720405437. Always happy to chat!


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