Transcription
How It is 2021. I am back on this mic and I’m so excited to walk you guys through how to get out of debt! We’re gonna walk through the Debt Snowball. This is the exact same strategy I used to get out of debt, and I’m going to walk you through that now. So let’s get started.
[0:25] Welcome, welcome to the All Things Money Podcast. My name is Mayra Alejandra Garcia, a financial coach that is here to inspire you to reach your goals, grow your net worth, and be wise with money.
[0:38] There are three steps to the debt snowball. Number one, you’re going to list your debts smallest to largest. And number two, you’re gonna pay minimum payments on everything but the smallest debt. And number three, you have to have a budget, so that you know how much you are able to attack the smallest debt with. We’re going to review some of the challenges that come with the Debt Snowball, and why it’s important that you know exactly how much you owe, what is the total amount of debt that you have.
[1:17] So, for the Debt Snowball, when I said list your debts smallest to largest, you are gonna focus on the balances. So it’s important that you see all of it. Once you have a total of the amount that you owe, it’s important that you know this because you need to be able to celebrate when you hit a milestone. Sometimes this is one of the longest baby steps. You have to be able to project how long this process is going to take, because like I said before, this could be one of the longest baby steps. So you have to brace yourself. You have to surround yourself with people that are going to encourage you, that are going to support you. And I want you to reach out to me. I want you to go to Instagram, and I want you to send me an Instagram message, a direct message. and say: Mayra, I am starting the Debt Snowball and this is going to take me X amount of time. And I want to be there to check in with you periodically. I want to make sure that I’m here to answer any questions you might have because during this long process, it is… it can be challenging and things come up and you have to learn to reprioritize some things. And so I want to be able to be there for you. I’m here to help. And if you don’t have Instagram, I want you to send me a message on my website, mayraalejandragarcia.com. My Instagram is @mayra.alejandra.garcia.
[2:57] So let’s get back. Once you have the list of all of your debts smallest to largest, I want you to make minimum payments on everything but the smallest one. You might say: but Mayra. I usually give an extra $20 or $15 to each of my credit cards, and I don’t feel like I can just give the minimum. Trust me, you want to attack a little one with a vengeance, and the only way you’re going to be able to maximize what you can send to a credit card to try to pay it off quicker, is if you have focus intensity. Focus on the one thing you’re doing.
[3:34] When you finish paying the first debt, you are gonna feel accomplished and empowered to continue on this process. It is psychology. You need to have aha moments, you need to have hooray moments, in order for you to continue on this process. And like I said before, this could be long for some. This could take six months. This could take twelve months. It took us 17 months. It could take you 2-5 years. Whatever it is, you have to have progress and you need to feel that you have completed successfully, eliminated some of this debt, so that you can continue feeling like you can win. You have to win to stay motivated.
[4:23] And third, you need a budget. You need to know how much you’re going to be able to attack this smallest debt with. And in order for you to know how much you have, you need to have a really good budget. And I want to encourage you, if you don’t have a budget that you go to my website and that you look into my Cash Flow Method, which is my course on how to create a budget, because every month is different. And so if you’re able to project between 6-12 months ahead, you can see how much you’re going to be able to give every single month. So the Cash Flow Method has an introductory price, for a limited time, at $59. So once again, go to the cashflowmethod.com, or you can go to my website mayraalejandragarcia.com, and there’s a link there to purchase the course.
[5:23] It’s important that you set time away from your family, away from your children, away from any distractions, and that you focus and give this time, because it’s important that you know all of your numbers, that you have exactly what you’re going to follow, and that you have a plan because if you fail to plan, you plan to fail. I don’t know who that quotes by, but I’ve heard it so many times. If you don’t plan wisely, then times just gonna come by and five years from now you’re gonna wish that you started now. And now that you have this knowledge, it’s time for you to step up and get it done. It’s important that you have the tools that are going to enable you to buy your house to save for your kids’ college, that you have retirement savings, that you have a paid off house, and these are all the things that are going to enable you to accomplish that. You need to follow the snowball.
[6:31] If you’re in debt, it’s time to get out. The Debt Snowball works because it focuses on behavior modification, not math. You might say: but Mayra, I have an interest rate that is super high on my credit card that has $20,000, why don’t I just focus on paying that down because I might save on the interest? And that might be true, but we’re not doing math here. Because if we were really doing math, then we wouldn’t be paying 20% interest to a credit card. This is not about math. This is about psychology, and this is what’s going to encourage you to continue going when you have these hooray moments, when you have paid off a debt, it’s encouraging to keep going. So you need to focus on the smallest one, so that you feel encouraged to continue this process.
[7:21] So, I want to encourage you, you might feel like: I want to pay something with a really big balance first and get out of the way, but that’s not wise. So just stay with the process and attack the smallest debt and focus on that and then keep going down the list of all of your debts. Ready to dig in? It’s time to get to work on this Debt Snowball. So, if you have any questions, feel free to reach out. I am here to help.