What's The Fastest Way To Pay Off Debt?
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- Опубликовано: 9 окт 2018
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Debt is one of our least favorite things to talk about, and that's one of the main reasons it is so hard to pay them off. BUT researchers have figured out how to rewire your brain to take on the debt monster.
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Two Cents was created by Katie Graham, Andrew Matthews, Philip Olson CFP® and Julia Lorenz-Olson and is brought to you by PBS Digital Studios. We love dropping some knowledge on all things personal finance and helping you make better money decisions.
Two Cents is hosted by Philip Olson, CFP® and Julia Lorenz-Olson
Directors: Katie Graham & Andrew Matthews
Written by: Andrew Matthews & Julia Lorenz-Olson
Produced by: Katie Graham & Amanda Fox
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Works Cited:
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Being debt free is soooooo great
Yes it is! My wife and I just paid our last payment on Friday August 9th and it feels awesome. Now onto building our large cash emergency fund and then investing 15% into retirement and getting house paid off in less than 10 years.
Aye. I just ran a report and discovered that over 10 years I went from *paying* 6k a year in interest to *making* $2k in interest and investment growth. That's essentially an $8k raise, $750 more per month for me.
I deadly agree.
Wdym, being debt free is dogshit, the bigger loans I get to have, the more money I make. Just invest the loans in assets instead of liabilities. The market beats most interest rates.
Alexogo96 123 you should make videos with all that knowledge
I got an undergraduate degree in Finance and reflecting has been so interesting. All of the classes I took just focused on the mathematical side and not the behavioral aspect :(
So true, thanks for sharing!
This basically shows there is a monetary cost to mental weakness.
Don't cut yourself on that edge, kid.
Being in debt is the first symptom.
Capitalism essential fuel source-without it the whole thing would colapse
🙋❤✂💳
No it’s a science actually. Everyone is governed by it. All our behaviors are shaped.
I was a CFS (Command Financial Specialist) for the Navy for a while. We were taught to use the avalanche method (I think they called it Full Steam?) but I also would tell people to use the snowball type, because it does feel good to wipe out one of your creditors. Sometimes we would hybrid the system, pay off one small debt and then start on the highest interest one next. Whatever way you use, just keep paying them off!
Me and you think alike I just wrote a comment about hybriding both methods together playing the lowest debt and then the highest interest.
A hybrid would be non linear and could work just as well.
You two have an awesome chemistry together, the comedy, visuals, sound, pace, and topics are on point! Only thing is you need to please make videos 10 times more frequently because I cant get enough! Keep up the great work! This channel will be huge in the near future!!!
Thanks so much Nelson! Being married IRL helps with the chemistry part haha! New episodes every Wed, be sure to subscribe! - Philip 👨🏻
Yes!
Love them they make it simple in a way to motivate you :)
Two Cents
Dwight speaking: and they look healthy, I hope they'll have more babies. We need more geniuses )
I love them ... :-)
I used the snowball method and in 4 years paid off everything including my house. Feels really good knowing my home and vehicles are all mine and not some banks. Any debt collectors that may call me either have the wrong number or are looking for my ex wife.
Well the house isn't yours. You're paying rent for life on the house, it's masquerading as "property taxes." But I get what you're saying.
@John Lester You don't actually own it. That's the trick they've pulled. But I get what you're saying too. -- Stop paying your property taxes, and don't get evicted, that'll prove to me you own it.
@@eldiesel4593 you do own the house, but you do not own the benefits living in a city provides that are paid by property tax.
@@joeisawesome540 If someone else can evict you, you don't own it.
@@eldiesel4593 well, they can tow your car if you don't drive it properly.. I guess you don't own it?
Personally, avalanche works best for me, I'm a person with a very high wait threshold for rewards and I'm pragmatic, eliminating a small debt will only make me even more stressed out about the big one still waiting on me and about the timescale it will take to ultimately be done with it. Getting rid of my biggest weight first makes me feel relieved and confident that if I made it through the biggest one I'll be fine with the rest of them because I've made it over the biggest hurdle, it's all downhill from then on.
Have you ever been in debt? It's been my experience that people who can use the avalanche method are the types of people who avoid debt. Most people in debt either lack self control or they don't do the math, which is why the snowball method works for them. If you had self control and did the math, you wouldn't be in debt.
@@quarterdocker Yeah, it's unthinkable for me why anyone wouldn't pay the highest interest one first. But then again, I have got no debt.
@@quarterdocker I use the avalanche approach, but I only have "good" debt to payoff instead of consumer debt. I also do the math and budget before signing up for any new loans.
Can't people who lack motivation just automate the paying of their highest interest debt and forget about it until it's paid off? Once I have a payoff plan setup to run automatically, I immediately get the reward of not having to worry about it ever again.
@@saiyjin98 what is this "good" debt you speak of? A mortgage? You even mention not having consumer debt, which is the debt people get into as a result of not having self control or doing the math. That's the kind of debt that the snowball method is more effective for. Of course the avalanche method works for you, you don't get into that kind of debt.
@Nick White In that situation, you pay off the car note first whether you use the snowball method or the avalanche method.
avoid debt like the plague
Amen!
Avoid debt that wouldnt improve you.
And spread it like wildfire
@The 3 E's unlucky, asian parents usually pay for their kids fees.
This comment didn't age well
In a perfect world, two cents would be what you'd watch on TV on a daily basis as it is very informative and life changing. Keep it up guys.
Caught the plug for your show on another PBS youtube series. Gotta say I've now binge watched all your episodes. Great content. You both are great presenters. Love the format. I honestly have so many topics I'd like to see you two cover. Not for personal reasons, but as general "I wish this was told to me when I was in high school" type content. Issues I've seen with people that might make for good content. 1. Why attorneys don't represent tenants. 2. The various ways child support is calculated. 3. Paying off your house vs saving for your child's college fund. 4. How to dispute your credit report rating / general info about the big three. 5. Bankruptcy, myth and fact, and why it's so complicated you need an attorney. 5a. Secured, unsecured, and priority debt in bk. 5b. Different chapters. 5c. The aftermath, and how credit companies stalk clients with offers after filing. 6. Insurance, why most people have term life and will never use it, vs short term long term disability insurance. 7. History of money. Debt as money. 8. Retirement. Index funds.
Yay, so glad you checked out our channel @Brian! We actually have about half of these topics you suggested filmed already and they'll be rolling out this fall -- stay tuned and subscribe!
Two Cents awesome!
Great topic suggestions!
@@TwoCentsPBS omg yes!!!
Same. New favorite channel! Binge watching and I have something else I should be doing right now.
Can someone please forward this video to the U.S. Congress?
Andrew Jackson did it. We just need to get those tariffs up to 40% again.
Politican: I could put together a realistic plan on how get the government out of debt but the banks that love collecting interest off our debt contributed so much (bribe) money to my campaign that I would not of been elected without there support. I better support my financial backers by ignoring this issue entirely while they continue to screw everyone else.
@@yodaflyz The issue isn't with the politician. It's with the people who elect them. We need more statesmen and less politicians, but today, everyone wants something for free so that's not happening anytime soon.
Chris M I agree. Every other politician promises free everything, which is the polar opposite of what we need. We need less spending to pay off debt, not more spending to increase our debt.
I wish that Economics was a mandatory subject in schools. Maybe then, we wouldn’t be electing idiots with no concept of money, spending, or debt?
Congress doesn't care, because it's not their money that they're spending, it's the american peoples money.
The snowball effect has worked for us.
A few visits to the ATM, snowball method and pound that debt.
I love the whole production of this. Not only are they super pleasant to listen to and animations, like at 1:45 for the "Avalanche approach" extremely eye-opening (financial advisors should have those!), but the short video format is also perfect for this subject matter. It's not putting people off by being too dry, on the contrary, it makes you suddenly want to do something super savvy! :D
Thanks for the kind words - so happy you found our channel! - Philip 👨🏻
ruclips.net/video/iiKr-i022mY/видео.html The Progressive Growth of the Money Supply Principle (year 2013) tells us the exact quantity of new money the economy needs to works correctly, driving us to the Wicksell interest rate or natural interest.
I hope everyone can watch this and get out of debt. Being in debt with no way out is the worst feeling in the world.
An arabic proverb says that debt is a dread by night and a shame by day.
Khalid El Mouloudi
Great proverb!! If you haven’t read “Richest Man in Babylon” I think you’d enjoy it. Full of great wisdom like that.
Look up dave ramsey snowball
Industrialism is set up to make debt slaves
My mom has always been the type to use the snowball method and tried to push it onto me but after 10 years of trying to do it that way, my debts never changed. I switched to the avalanche method, saved all my cash tips until I reached the full student loan amount and paid it all off in a single day. I’m finally student loan debt free after saving for only 6 months.
The true avalanche method involves paying off pieces of the debt as you get paid, rather than saving and paying it off in 1 go.
@@DerangedAussieMan i used the true avalanche method this year and just paid all mine off. What Victor is suggesting is more like a missile, and it only works if the accumulating interest isn't more than you save.
I've gotten out of debt using the "payoff the high interest rate" approach. Highest interest rate usually has the highest monthly payments. Once I paid off the high interest rates I had a lot of extra money to throw at the other debts. I saved over $5,000 on interest that I didn't pay. That was my dopamine rush. Math don't lie!
Turns out I’m an emotionless robot. Avalanche method all the way!
I’m surprised you didn’t also mention the tsunami method of paying off debt. That is my preferred method, it works really well for me. It is basically listing the debt by what is the most pressing or stressful, no matter the rate or amount owed. I find that the emotional relief is just like what you explained for the snowball, but sometimes a bigger debt is more urgent and goes away faster than a small one, which can feel amazing!
It really works! Paid off my credit card today, feeling awesome! Now it's the student loans that are being a giant monster to be managed! Thanks guys!
GURL. YAS!!! You should be thanking yourself and your hard work!!! : )
I am a fan of the debt snowball, and I feel one important aspect was left out that math-oriented spenders can appreciate. If there are *years* of paying off debts ahead of you, there will most certainly be interruptions along the way: medical bill, broken furnace, etc. The snowball method has the distinct advantage of widening your gap earlier in the process. Sure, it may feel silly paying off that 0% interest loan of $500 first, but getting rid of it at the beginning means you reclaim that $25 per month very early in the process. If at any point you need to pause the snowball, you have access to much more money than if you were doing the debt avalanche and grinding away at that $50,000 loan.
Also, when comparing snowball and avalanche, be sure to run the numbers for real! See what the difference is! In my case, doing avalanche would have saved me a couple months and a couple thousand bucks, which was peanuts in the context of how long I had to pay them off and how much I owed. Going snowball was the right choice for me.
As a math-oriented person I found your argument illogical. It only "frees up" that $25/mo psychologically to a rational spender. If you need to pause the snowball, it likely makes more sense to add the new cost in as more debt, then continue paying your highest interest item off first. Your new bill is unlikely to be the new highest in interest, so you are putting yourself back even further than before. It's a good psychological strategy but I'd argue not a great one for a robot
I am expecting to be debt free by April.
I work to be free and enjoy my money, not to be a slave at work. I have met so many people who has to work 40 hours to pay their bills cause they gotta show off the latest car to their friends and coworker. My current and total debt is $5,000 dollars. I can only work 35 hours and enjoy my life. Go places, eat outside. I keep a basic lifestyle. I don't buy what I don't need. I have lived pay check by pay check and it does suck.
@Reinald Yes, kind. My only debt is a used car debt I bought a year ago to be the backup car. $3k more to go, $165 per month. I don't have any CC debt or student loans. Have $4k in my savings for emergencies only.
@@villafontananorte $4k isn't much. Perhaps increase your work to 40 hrs/wk and save a bit more in case that car needs work or you need money for some other reason. With a car loan for $5k and only $4500 in the bank you are insolvent and still living paycheck to paycheck but you just don't realize it.
@@rhoonah5849 It is not that much but my only expenses is the car loan, $165 per month. My rent is $650. Utility about $150. Maybe $100 in gas per month since work is only 7 minutes away. Cell is $35 with RedPocket. Insurance $85 per month. Any $15 an hour job can pay my bills.
@@villafontananorte smart
Just Go North! Only expense for now. Emergencies happen, so it doesn't hurt to be extra prepared if you can take a few extra hours here and there. Up to you of course
The guy really looks like Ryan Gosling
Haha someone finally said it. Maybe a Spanish one?
Haha, thanks guys! I'm blushing! -- Philip :)
@@TwoCentsPBS You're not fooling anyone with that fake mustache, Ryan!
Jonassoe 🤣🤣🤣
he looks like money mustache
Philip and Julia, I LOVE your channel!! I'm productive bingeing right now--watching your videos, doing personal finance and real estate research, drafting spreadsheets to assess timelines for and paths to achieve various goals, watching more videos, learning about tax brackets, investment strategies, and D*BT, watching yet more videos, laughing, and dreaming up my future all the while! This is a good Sunday. You two are wonderful. Thank you!
I don't know why but feel so happy when I watch any of your videos. And this for any topic you are talking about... between the animations and the presentation this is fantastic!
Keep emotions out of your finances everyone. You be better off for it. Be DISCIPLINED, follow your brain, logic, and MATH, not your feelings.
Honestly, if you just keep your feelings out of your finances, you wouldn't even need to financial advice in the first place.
That is all very true but most people happen to have feelings.
Most people can't point to Europe on a map. Most people cant perform what is considered basic math in high school. Most people lack basic emotional control. Most people are fucking stupid.
You got to set the bar really low. We are talking about humans after all.
Agreed. In fact, the avalanche method is generally the one used if for some reason I have to rack up a lot of debt(generally caused by an unforseen expense). When this happens, I consider my finances to be in "damage control" mode, at which point the avalanche method is used to correct the problem before it spirals out of control.
@@johnrickard8512 If I were in a place where I need to cover the cost of an unforeseen expense I would use the reverse of the avalanche method to pay for it (max our the lowest interest rate sources 1st and move up the interest rate sources). Then I would apply the avalanche method to pay it off. I know so many people who have $10K credit cards as a "safety net" for these things I just think they're crazy. Years ago my structure was $5K in a savings account that got me as close to inflation or higher followed my a $10K line of credit, followed by a 2nd $10K line of credit with another bank. That gave me access to $5K instantly with no interest costs and access to $20K with interest rates of 4 an 6%.
R u a bot?
Thank you for the encouraging and practical advices about money! I really appreciate the channel making these stressful topic easily digestible.
Your videos always bring a smile to my face. You two are the best!
I mustache you a question...
not really, just wanted to get that out of my system.
7 Baby Steps
tonycns Dave Ramsey absolutely
I've taken the "ignore the debt and build a savings because I don't know if I'll have a job tomorrow" approach.
Same
A lot of people push for paying off debts immediately, but having a bit of flexibility allows you to be able to say no to bad deals, and if your debt % is low enough, allows you to out-earn your interest payments.
I absolutely love these guys. So much wisdom. All the best for your future endeavours :)
Thank you sou much! So glad to have you :) -- Philip
I loved how they touched on the psychological side of paying off debt. Another important factor psychologically is knowing why you want to pay off your debt so quickly. You have to have a reason why you are willing to make those temporary, but sometimes painful sacrifices to achieve the goal. Not only will that goal help you continue the course, but you maybe able to “sprint” faster because of it.
Wow, this channel is a gem! Love the format of these videos
If being a millionaire retiree is your future forte, then keep a close eye on the stock market stakes and ensure that you invest in the right stocks that suit you.
It’s easy to double few dollars in the stock market
Investing in the stock market is the best option to make a passive income.
Virtually all the markets are crazy, most people pay more attention to the shiniest position on the graph, I’m keeping a diversified portfolio.
How possible is it to earn a thousand dollar per month on the stock market?
You can surely earn $1000 per month by trading stock market, provided you have in depth knowledge of trading strategy like technical analysis, chart patterns, support and resistance, trendlines, risk management
most stocks in my portfolio are underperforming and there’s too much volatility with key stocks. Which stocks would you recommend I buy?
As soon as I started watching, I was going to say "Snowball Method" as trumpeted by Dave Ramsey first, lol.
Snowball method existed well before Ramsey
I've said it before but I freaking love these two! And wow, the production value in this video is off the charts! I know it takes an extraordinary amount of time and effort to make these, but the impact they have on those people you help is immeasurable..
Hey! Just found you guys, and I’m lovin’ it!
Great chemistry together, awesome videos/ideas. Keep up the good work!
This channel is amazing. It clearly explains the psychology and emotion behind habits and behaviors that drive money decisions in our daily lives.
Yaaaassss New video! I was waiting for it for the past few days 🤣
Laizra, since you're obviously following our channel closely right now, there will be a new episode TWICE PER WEEK all fall! Woo-hoo! -- Philip :)
I discovered this channel today. I mean, I'd heard about it on other PBS shows but hadn't gotten around to checking it out, mea culpa. Anyway, I'm already hooked. This might be my favorite thing on economics after Crash Course Economics.
Great content, thank you really, especially this video, you're making things easily understandable and approachable. You're really helpful.
"If you are doing Math, you are not in debt in the first place" - Dave Ramsey
I mean sometimes you have to
Dave should have made a cameo here lol
Oh son of a d*bt! I just d*bting dropped my motherd*bting croissant!
I can honestly say this video helped. Thank you!!
Your segments offer such helpful information, thanks so much.
Let's give a round of applause for Dave Ramsey! Who's been pushing the snowball method for a long time!
D. Utley and you trust Dave Ramsey isn’t secretly funding this? Obviously keeping an eye on total balance and interest is important. Paying off one small debt shouldn’t mean that you are farther from paying off the debt as a whole because you let the interest accumulate.
Love it. I’m in FPU and I am a daily listener
"If you were doing math. You wouldn't be in debt to begin with. 80% behavior 20% head knowledge." - Dave Ramsey
@@foford2010 yep, if a person is able to calculate, they would not overburden what the have and get
Better than I deserve!
The more important question....
How is he pulling that mustache off?
You guys are awesome. Content, editing, speech, delivery, everything. Spot on. In love 💕
This video is one of my faves you guys have made! I've considered both methods to approaching debt and I found both to be effective in their own ways so I definitely agree with this video. Based on my "Gap" I switched between both methods to tackle debt and still enjoy my spending on the side. DEFINITELY gonna share this one with friends and family.
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It makes mathematical sense to pay off debt based on the interest rates, but may not be the fastest way. You may have a 20% card and 17% card which is close in interest rates, but if you can get rid of the 17% card in three months verses 13 months on a 20% card you reduce the debt faster.
Money management is as much emotional as it is financial. It often makes sense to knock down some small debts first to see your progress. It's too simple to go strictly on interest rates. What it does take is a plan with goals and disciplined execution.
Skykiller Right, there’s no one size fits all
Mathematically avalanche( higher interest first) IS the fastest way.
But some ppl don't do well with mathematics, even basics.
Andriy Shapovalov depends on whether you’re “mathematically” talking about the total amount of debt or the total number of creditors - Skykiller is talking about the latter, while you’re talking about the former.
I love this show
Thanks so much Jane, we're honored you joined us! -- Philip
I love the content you are making and the explanation. I also notice the body language while both of you try to tell someone and the other one keeps the listener in a good shape that you never get bored. Thank you for valuable and entertainting content.
You are both so awesome for creating this. The tools you are both sharing is empowering. Thank you from the heart!.
-students
Love your content so far. I see this channel becoming a much cooler less old fart-y version of Dave Ramsey's thing. You've earned a subscriber with me and I'm planning to force feed all your videos to my friends.
Love it!
But I like Dave too!
Dave is awesome Bro don't hate that man has change a bunch of people ... got me paying debt 64k
Dave's advise helped me pay off 130k in two years making 70k in the family household. snowball works! I like their visuals of his advise.
Juan Alvarado I force fees it to my boyfriend all the time and he loves it 😄
Also I’m doing the snowball effect and it’s the best. It makes me feel good when I pay off a debt quicker.
I don't know why, but the way you two said the tagline, " and that's our two cents" in this video came off as extra sweet. Y'all are precious. Keep up the good work!
I love what you’re doing guys, great job!
Interesting. I guess the avalanche method worked well and effortlessly for me because I'm a math person that didn't need continuously positive feedback.
I simply made a plan and stuck to it, kinda like how I fight high level bosses in a video games. I also saved money because I took into account interest rates on each amount rather than looking at the simple owed amount.
The only debt I have is a house and car note and the car is 0%. I'm one of the few people who parents and grandparents turned off the phone and cable before accruing interest on credit cards and that stuck with me when I got my first line of credit and first job to go with it. The best way to get your kids to be responsible is to show that even what most people consider basics aren't free and keeping them fed and in a home is more important than watching TV.
Car's really aren't 0% interest because you make up for it by being charged a higher initial price.
@@2awesome292 you get charged a markup for any vehicle unless you can buy it from another owner instead if a dealership. Though the owner isn't likely to provide you with a warranty (unless there is still one in the vehicle and you get it transferred), and dealerships normally do an inspection and give you the option to buy a warranty or extend the one that it already has if it is under a few years old/under the milage cap. Either way, I was paying for a new vehicle and I'm paying nothing for interest. I'm effectively paying a "buy it in full" price over there course of my contract.
In simpler terms: If you go to any dealership you have the markup, closing costs, taxes, and anything else they are going to charge you anyway. The price doesn't go up if you finance at 0% because it is based on your credit and if you fail to pay you incur the accrued interest plus likely have your vehicle repossessed.
@@EdwardThimbleHands That $25k car @0% interest is sold to an investor for (made up#} $22k, they are just including the interest in the price of the vehicle to make it look like they are being generous.
Would more people buy the car for $22k @X% interest rate or $25k @0% interest?
I'm not saying don't buy 0% interest vehicles; i'm saying compare the $25k @0% interest vs the $23k @X% interest. I'm still saying almost new vehicles {depends on brand though tbh, used Subaru's can end up costing more than new ones for dumb reasons} are a better buy than a new vehicles and just put the difference in investments and you could potentially pay for your next car from what you saved.
Btw, you are able to buy extended warranties with private sales, dealer gets huge commissions for selling you those extended warranties (sometimes they make more off of warranty than they do off of the car}
The other way was effective with me. My dad would max out the cards, overdraft his checking, entire winters with a broken furnace, lights getting shut off, running out of gas, etc. Now I save over 1/2 my money so I hopefully never live like that again.
I agree. I haven’t had cable for over 10 years. Throughout college and into adulthood I use RUclips, not even Netflix or Hulu. I spend too much time making extra money!
Seriously, I like your videos. 30 year old and all... and I enjoy the flow of the video.
Subscribed!
You guys are absolutely Brilliant together..!!
Keep up the consistency with the channel...!!
I've watched so many 2 cents videos I made a dollar. 😂
Like 50
"$26,000 student loan debt", 😂
I seriously love you two!! keep up the good work!!
You channel holds such an incredible value, I really appreciate you sharing information on these topics. Growing up I always thought talking about finances are for affluent people because this is what society teaches us. But with the help of your videos everyone can realize that lower and middle income people like me should also learn about money, in order to handle the amount we do have in a smart way so that we don't loose it and even potentially generate more. It took me more time than I would like to amit to realize this, but I am finally aware of this. Thank you!
let's talk about debt baby~
let's talk about you and me
let's talk about all the good things and the bad things that may beee
let's talk about debttt 🎵
Off topic but am I the only one who actually enjoys hearing about other people's dreams? I didn't know this was such a taboo topic lol
Thanks again for a brilliant video. I learn so much, and you explain things so everyone can understand them!
Great channel guys. The method mountain graphics were one of the best visualisation I've seen about the topic.
Speaking of a snowballing method, imagine how huge this channel is going to grow within half a year.
there's a typo in the subtitles "dead monster" instead of "debt monster"
Thanks, I enjoy,and learn do much from you guys. God bless you both.
I love your videos, found this channel through youtube suggestions, i'm hooked :D, Thanks guys!
With the snowball method, that 22% interest loan is going to grow so fast you will never get rid of it while pursuing that 0% interest loan.
Instead of snowballing, you'd be far better off consolidating into a lower interest loan.
You're assuming that the lower interest rate loans exists. And while they often do, they may not always exist.
Second, even though that 0% interest loan is wonderful, it's still money that must be committed. Given that one can get rid of two debts with 1,850 dollars (or so, interest on the 11% should be small if you focus on that), I'd say knock the 0% out for the sheer flexibility...and maybe THEN focus on the 22% (again, should you be unable to get rid of it. Payday loan stores can be beasts to get off one's back...).
Remember that one can always shift the focus when necessary.
@@godozo You may be able to use the quote of one bank interest rate as a leverage for another to get it lowered a bit. A bank would rather have you be indebted to them than to their competitor so they may cut some slack on their profit margins to entice you to choose them.
@@godozo the best approach mathematically is the brachistochrone which you can think of as minimizing everything or in other words which is the order in which i have to pay the least
I use this method.
Buy a small home so you aren't paying rent anymore. Pay as much as you can to pay it off quickly. It's a small 2 bedroom unit so doesn't take long to pay off.
Use the equity to buy a bigger family home or an investment unit. Either way you have a secondary income to pay the next mortgage. Keep paying as much as you can.
Just keep this up and then when one is paid off, buy another investment property. Interest on investment properties is tax deductible.
I have 6 properties now with my wife and I am 34.
You guys are just so awesome 😭 I love all your videos, they inform and inspire me to make the best money decisions I can as I navigate my post grad financial situation. Wishing y’all happiness, health, and wealth! 😊💖💵
So nice of you both to talk about it. Love this video.
Yeah, I'm sticking to the mathematician's method.
Tanvir Kaykobad as long as you stick with it, the problem is most people don't
I was taught this method first and early on. I dont really care if progress toward paying off the largest debt takes longer as long as I can see that progress is being made.
I'm actually doing my most annoying bill first. I just hate it so much I want to get rid of it. I get so happy everytime I make a payment on it. Then after that, my highest interest is actually my smallest debt, so I will be doing both the avalanche and the snowball at the same time.
I used a comparison calculator and using the snowball vs avalanche method only made the difference of about 6 weeks in my estimated payoff date. I went with the snowball method because I was willing to pay 6 week’s worth of interest for the added psychological benefits of the faster wins.
@@username00009 Wow. Smart stuff
The fastest way to pay off a loan is to take out a loan and have the cash on hand to pay it off immediately afterwards
Wow, this is literally everything I was trying to explain to my friend today. Can’t wait to share this video to her!
I'm hooked to your content. Love your work!
Please make a video on whether you should give preference to investing or paying your debt when you have a steady income. Or in what ratio should you divide your money between the two.
Thanks. :)
if you get hooked on positive reinforcement, what happens when you finish the game? Wouldnt you seek out more of the same to restart it?
Such a good question! As a matter of fact, what we have observed is that the "Game" continues, except you're putting the money into investments or savings instead. Getting "hooked" on the positive reinforcement of eliminating debt ends up becoming a super-powerful savings tool that can last a lifetime. -- Philip 👨🏻
@@TwoCentsPBS interesting... i guess ill consider debt management through this method as a gateway drug towards becoming an uber-rich. Cheers!... found your channel today and, so far, really have enjoyed the videos
@@TwoCentsPBS great response. Right on point.
Also because it motivates you and it’s fun it causes you to work more and want to cut your budget more thus actually making the snowball better mathematically. Also I can’t believe no one talks about the cash flow aspect. With the snowball it increases your cash flow with having fewer payments faster so you can cover emergencies with cash and not debt during your journey so you won’t get discouraged and also show you hey look I’m paying off debt and when something happened I didn’t rely on debt like before I can take care of it with cash. Just pause your snowball and pay minimums and use the cash flow difference to cover it plus your small EF as Dave Ramsey teaches.
You get less cash flow if high interest debts accumulate while you are busy paying off the low rates. Avalanche is superior, just stick to the fucking plan and dont stop paying off your debt because "it feels bad".
Underrated channel. Keep the amazing job guys!
Over these past 3 years I started the snowball method and once small debt was paid off I moved on to the next. It has gotten me so motivated that I even started cutting off unwanted expenses such as gym, netflix, hulu.
I think giving up gym is a bit sad for someone who regularly exercise there 😭
*It's super effective
I still prefer what Black Einstein said.
Yea bro mathematically its correct you are paying the least amount possible
The best video. Both entertaining and educational at the same time
Will be using some of your solutions for my persuasive speech, huge thanks!
I disagree with this in my personal case. I always go for the highest interest rate first. Reducing wasteful expenses is key.
Good way to explain both methods! What about brain hacks to avoid the D-word in the first place in a future video?
The simple answer is: adjust your lifestyle so you spend less than you make (whenever possible). The complicated answer is that this is abnormal and sometimes seems impossible/unreasonable (vehicle financing, student loans, mortgages, etc.).
We've got many more videos coming to RUclips that will help give you ammunition to avoid the D-Word in the future! -- Philip :)
People mix what they need with what they want all the time. So the first step is to separate the two and spend less on the "want" side. Sometimes even what some people perceive as a need can be disposed of. For example, you don't really need a car if public transport and walking are a viable option for you.
yeah. that's gonna be better
I think limiting use of credit cards is a good start.
Of all my debt that was the worst psychologically since it was so much money. Paying the minimum on one could take over a decade even if it only had 900 dollars on it.
I put all my credit card debt into one loan now and my credit score went up by 40 points and I now have a loan at half the interest with it being paid off in 3 years. Much easier to wrap my head around.
Fantastic ideas and unlike any other self help videos and Gyaan. Good stuff, keep em coming.
I’m so glad I found your channel! I subscribed immediately after watching your “Dumb with Money” video and plan on binging the rest of your channel 🙌🏽 I don’t feel quite so guilty cause the content is educational 😬😂
The Dave Ramsey method works great. Once you get the snowball rolling does not matter what the interest rates are because your paying your debt off fast.
He didn't invent it.
Another positive attribute of the snowball method is that it reduces your monthly burden quicker.
Just subscribed to this channel. Most if the content reinforces what Dave Ramseys teaches. It's great!
I'm almost debt free, just got our house to go!
I can't get enough of your videos. Awesome.
Don't get into it in the first place.
Of course, the practicalities of that are easier said than done.
These guys are perfectly describing what Dave Ramsey has been saying for the last 30yrs..
👍👍👍👍👍❤️!!!
Creative and fun way to deliver the msg. Great, keep going 👍
This is so insightful and true in my experience, thank you guys!