(Jessica) Welcome to Money Matters on the Southern Bank Financial Wellness network. I’m Jessica.
(John) And I’m John!
(Jessica) And today we’re talking about debt and snowballs? What’s that about?
(John) The debt snowball is a method for reducing debt. Like a snowball, it starts small and gets bigger.
(Jessica) So, how does it work, exactly?
(John) With the debt snowball approach, you focus on paying off your smallest debt first while maintaining the minimums on other payments. Once that first debt is finished, you apply those payments toward the next smallest debt, and so on, just like a snowball rolling down a hill and building momentum.
(Jessica) Watching debt decrease can be a great motivator.
(John) Exactly. And it’s an awesome feeling to be able to finish off one debt and start making progress quickly on the next.
(Jessica) This method does not take interest rates into account?
(John) Correct. It focuses on the balance owed. Other repayment plans may be better suited to your needs if you’re dealing with high interest rates.
(John) That’s right. Another topic for another day.
(Jessica) We’ll see you next time on Money Matters. And remember, Financial Wellness starts here!Share