RECESSION PROOFING YOUR FAMILY POST 5/6: STOP BORROWING & START PAYING OFF DEBT

​Nathan Morris said, “Every time you borrow money, you’re robbing your future self.” In the case of a looming recession, we cannot afford to rob ourselves and our families. 
Once you have your beginner emergency fund, you will want to buckle down and start paying off debt using the snowball method. What is the snowball method? Here it is in a nutshell:
1- Make a list of ALL your debt (except the house) - smallest to largest. 
2 - Find all the “extra” money you can - remember the idea of cutting your budget and finding extra income? 
3 - Pay all that extra money on the debt at the top of the list - pay just minimums on the rest. 
4 - Once that first debt is paid off, take the minimum payment and all the extra you’ve been paying to the first debt and pay it to the second. 
5 - Continue doing that - making your “snowball” bigger and bigger - until you get to the end of the list and you are consumer DEBT FREE!
So, why the snowball method? Shouldn’t I pay off the highest interest first? Many financial coaches recommend the Snowball method because it keeps you motivated. Starting with the smallest and working your way up helps you have quicker wins to keep you going. Often, when you start with the highest interest rate, it takes a long time to pay it down and motivation is lost. 
The second part of this is to avoid adding more debt to the list. With your emergency fund, you are safeguarded from further unwanted debt. Just remember, if you do have an emergency, pause the snowball and fill up your emergency fund again then get right back on track. Keeping your plan and budget in to forefront of your mind will help you avoid those temptations to borrow more for wants - couches being on sale is not an emergency. 
It’ll take time and work to get to the end of your snowball, so start now. You never know when that job could end, and not having debt payments sure will help! Next time we’ll talk about one thing you can do now to prepare for job loss... Stay tuned!