March 18, 2025 • 20 mins
Debt Repayment Strategies Unveiled | Bryan Foltice Behavioral Finance Podcast
In this episode of the Bryan Foltice Behavioral Finance Podcast, host Dr. Bryan Foltice dives into debt repayment strategies. Dr. Foltice discusses the growing issue of consumer debt in the U.S. and reveals different methods to tackle it, including the snowball, avalanche, and snowflake methods. He also introduces a hybrid repayment approach. Additionally, he offers advice for new graduates on balancing debt repayment with retirement savings. Don't miss this insightful episode to help you or someone you know get out of debt more effectively.
00:00 Introduction to the Podcast
00:26 Understanding Debt Repayment Strategies
06:54 The Snowball Method Explained
09:33 The Avalanche Method: Pros and Cons
11:25 The Snowflake Method: Small Wins
15:36 Hybrid Approach to Debt Repayment
18:49 Conclusion and Final Thoughts
Bryan Foltice Behavioral Finance Website - www.bryanfoltice.com
Money Strong Program - www.moneystrong.net
Instagram - www.instagram.com/bryanfoltice
Linkedin - https://www.linkedin.com/in/bryan-foltice-2578a116/
Disclaimer: www.bryanfoltice.com/cv
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:04):
Welcome to the Brian Foltisbehavioral finance podcast,
where we unravel the mysteriesof behavioral finance and unlock
the secrets to making smarter,more informed decisions with
your money.
Now, here's your host, Dr.
Brian Foltis.
Hello, and welcome everybody tothe Brian Foltis behavioral
finance podcast.
(00:25):
My name is Brian Foltis.
And today Day we are going totalk about debt repayment
strategies and learn about thedifferent types of strategies
and be able to talk the samelanguage around those and try to
choose one that fits yourself orat least those around you that
(00:45):
you're trying to help out ifyou're not in debt, to maximize
their efficiency in order toget.
Out of this thing calledconsumer debt.
And we see this rising each day,the numbers in the U S keep
rising.
We're starting to talk intrillions and that's just for
(01:06):
credit card debt and peoplemaxing out credit cards, getting
into this debt and my wholevoice here is trying to get
people.
Out of debt as fast as possibleand efficiently as possible.
And this comes off the back ofthe.
(01:27):
Money Strong program that isalmost ready to go.
It's all getting organized andset up and getting ready to
launch here in the next month.
And I'm super excited to getthat rolled out here around
spring break time.
And when we talk about gettingout of debt, we talk about the
(01:49):
different repayment strategies.
That's what we're going to talkabout today.
When we come back, we're goingto talk again about the
different intensity levels andwe're just going to break down
the different intensity levels.
And my approach to working yourway through debt is not a one
(02:09):
approach method.
Mine's a little bit differentand what I want to Is I want to
take a step back, lay out thedifferent methods, have people
choose which one best fits them,because not everyone is going to
follow the same method, noteverybody is going to thrive
(02:31):
under the same intensity levels,and so you're going to notice
here when we have old schoolDave Ramsey talking about the
snowball method and that's theway to go.
For some people that's totallyfine.
We're going to break that down,why that's good, why it might
not be good.
And then the same thing with theintensity levels that it's just
(02:53):
all in until you can't do itanymore.
And then you're just going torice and beans this until you
get out of debt.
And I think that has a reallygood intention behind it, but it
often fails because peoplearen't always wired like that to
just go hardcore in order toreach their goals.
(03:13):
And that's where I want us totake a step back and try to
identify, Hey, I'm this type ofperson, or I'm not this type of
person.
And we'll get into that methodin that future episode.
But I'm excited to talk aboutthat because I think we need to
really Break it down in a waydifferent way instead of saying
with a heavy hand, like this isthe only way you either do it or
(03:35):
you don't.
And so when we're talking aboutthese repayment methods when I'm
talking to students who aregraduating college, a lot of it
revolves around student loansand trying to repay those
student loans.
Where does that fit in with?
all of the other financial goalsand my retirement savings and
(03:57):
how do I allocate that or how doI strategize that.
So here's some of my thoughtsaround that.
First of all, before we starttalking about the repayment
method, when we get a job out ofcollege, we're going to take a
look at our employer's offeringsfor retirement.
And usually without, I haven'tseen an exception, but if the
(04:23):
employer is offering some sortof repayment or matching plan,
we're going to take that freemoney.
So even if you have debt, takethat retirement contribution.
And get that free money, even ifthey're matching 25 to 50
percent in the world of finance,I have not seen any guaranteed
returns of 25 to 50 percent inmy world.
(04:43):
And so we're going to hop onthat.
Sometimes you do have to jumpinto the employee handbook to
see this really nice benefit.
It's not always flashing.
In lights on that benefithandbook, but we want to
definitely look through See whatthat is and set that up before
you get your first paycheckThat's usually how I tell
(05:06):
students to work on theirretirement contributions while
working on paying down the debtand then If you don't have any
debt Then I say we have to takethe contribution matching, and
usually between 10 to 15 percentwe're going to set aside for
retirement before you see thatfirst paycheck, so you're not
(05:27):
tempted to spend it, and startmaking some mental accounting
notes around how you're going tospend that money, and then, so
that's what I'm saying, if youelect your contribution after
your first paycheck, it's goingto be considered like as a loss,
and so you're going to have tocut and make some, even if it is
just mental, so just Take thatcontribution out before you get
(05:52):
your first paycheck and you willnever miss it because you'll
never know what you're missing.
And you can do that as a 22 yearold coming right out of college.
Then you're just settingyourself up.
You don't really have to do muchelse over time because now time
is on your side and it's goingto be working for you.
Nevertheless, friends today.
(06:12):
These repayment strategies thatwe're going to talk about, I've
got three of them and then I'vegot my own fourth one that I'm
going to make, but I figuredthat these three repayment
strategies are.
Nice to talk about or prettyapplicable today as I'm sitting
here in my home office in themiddle of February in
(06:35):
Indianapolis, Indiana, lookingat the snow outside and having
walked my dog in the negativeseven degree.
That's Fahrenheit, windshield,then I feel like these payment
strategies are prettyappropriate right now.
First one, this is the popularsnowball method.
(06:58):
So the repayment strategy, youhave this debt, we're going to
line them up.
As a snowball method, and we'regoing to try to pay off the
small balances first of thatfirst in line has the smallest
balance, and then we'll stackthem up in order from smallest
balance to largest balance, andthis actually has some benefits
(07:23):
to it, and we're not reallydiscriminating against the
different interest rates thatwe're paying on it.
What we're essentially trying todo is just get some momentum,
get some small wins.
Get some clarity and clean up onif we have a number or a large
number of debts starts to cleanup.
(07:44):
So there's some emotional winsbehind that.
And that's why I think DaveRamsey really likes to push that
because it starts to get somemomentum, builds that emotional
aspect that we can't overlookhere as we're starting to.
Work our way out of debt and sothe snowmobile method that's
(08:07):
been this commonly acceptedmethod to pay off loans.
The con though around thesnowball method is that the
smallest to largest balancedoesn't discriminate against
interest rates.
So what I mean by that is if youhave small balances with small
(08:30):
interest rates, then, and youhave big balances with high
interest rates making minimumpayments on your large balances
while you're knocking out thesmall ones is a gonna
mathematically accrue moreinterest.
over time.
So you might be paying a lotmore interest based on your
circumstances.
(08:50):
If you are doing this snowballmethod.
Now, if you have marginallydifferent numbers from an
interest rate standpoint, over ashort amount of time, this is
not going to really have asignificant effect on overall
interest paid.
But it's definitely somethingthat you want to keep an eye on.
(09:10):
If you have an outlier, you wantthat is super high in interest
rate compared to your otherdebts.
Let's scrap the snowmall methodand let's start attacking that
one ugly duckling that's in yourdebt portfolio and get that out
of the way.
And actually.
(09:31):
That is the second repaymentstrategy.
So instead of the snowballstrategy, we're going to work on
the avalanche strategy.
Now avalanche strategy reordersyour debts based on high
interest loans first.
So here we basically sort itfrom top to bottom based on
highest interest.
(09:52):
That.
Is from a mathematicalstandpoint going to save you the
most money on interest paid.
Now, you don't always have thepsychological wins because you
might, and here's what I mean bypsychological wins.
If you have a high interest,high balance loan at the top of
(10:12):
your list and you're workingyour way through it, you're
slugging your way through it andit's not going away.
This is where you don't getthose mental wins.
And that's where on paper, yes,avalanche method is the best for
interest paid.
And, but in reality, if you getfrustrated or bogged down and it
(10:35):
leads you to.
inaction, then this is not thething for you.
And that's where this comes downto the individual and really
taking a step back going.
I need some mental wins or Ireally just want to get these
annoying debts out and I wantthem out of my life.
(10:57):
And then I will just move on andI'm not going to do this
anymore.
If you are stacking these up andjust know I'm going to get
frustrated or I'm really not,I'm not sure how to do this.
Then you want to do the snowballmethod, trying to pay those
small balances first.
So you have the snowball method,paying off small balances first.
(11:18):
You have the avalanche method.
That works on paying highinterest loans first.
And then you have what we callthe snowflake method.
So you have these two largebodies with snowball and that's
supposed to, as it rolls downthe hill, that's the idea.
The snowball gets larger.
That's the momentum.
That's the wind.
(11:39):
The avalanche is just trying toknock it all out in the most
efficient way possible.
Stacking them up by loans tosave money on interest.
Snowflake is making smallincremental extra payments,
small incremental extrapayments.
Now you can use the snowflakemethod in isolation.
So making minimum payments andthen these small incremental
(12:02):
payments come in on the side andthat's fine.
But what I would like to see isusing the snowflake method in
conjunction.
or with the snowmall andavalanche method.
So you have your plan thatyou're trying to execute in
order to get out of debtregardless of whether you're
(12:24):
stacking them by balance or ifyou're stacking your loans by
interest rate and then wheneveryou have new money coming in
that is adding to the snowballor that is adding to the
avalanche not just in isolationand what we mean by these the
snowflake small incrementalpayments This is where the side
(12:45):
gigs or we'll talk more aboutthat too, because I've noticed
there's some debate aroundwhether or not, these side
hustles are good, or how doesthat fit our overall life
purpose and life plan?
And I definitely have somestrong feelings around that as
well.
And then, or if you're sellingitems, just different things
(13:06):
like that, any extra moneycoming in your you're selling
pictures of your feet orsomething online and you get an
extra money for that, thenthat's going to be where that
money goes.
Maybe more applicable is goingto be.
Tax refunds coming in you getyour tax refund.
This is ultimately thisbehavioral decision of all right
(13:28):
How do I account for this?
so we say that this money comingin is going to be mentally
treated differently as earnedmoney and this is where people
go and buy their big screen TVsand really go crazy with their
newfound money that they getfrom these tax returns when
could be used in the snowflakemethod to just pay off your debt
(13:52):
or to be treated as earnedincome and Saved or invested or
used to pay back loansappropriately.
We've got the three methods AndI realized okay, that's this
good I at least now when we'retalking about how you're going
to get out of debt then studentsand people can We can talk the
(14:14):
same language, I'm using thesnowball method, or I'm using
the avalanche method, got thesnowflake method working.
I love that.
I think that's a really goodthing to be able to have a more
comprehensive look.
Instead of me standing heregoing, we're going to do the
snowball method because I saidso.
We're going to have a morecomplete conversation around
this.
(14:35):
I'll add a little monkey wrenchin here because when Mandy and I
got married.
I just mentioned a month or twoago that she came with her
student loans she was stillpaying off and that was to the
tune of about$42,000.
And when that happened, I got tosee what that looks like.
(14:57):
'cause it had been a while sinceI had gotten out of my student
loans.
And I usually had mine groupedjust in one clump and.
That's how I remember paying offmy loan.
It was just a clump and it'sworking to work your way down.
Hers came in a variety ofdifferent amounts and different
(15:18):
interest rates.
And there wasn't too muchdiscrepancy around the interest
rates, but there was adifference between some of them
and.
I thought to myself here's agreat case study around how do
we get out of debt?
Or what would be our method inorder to do this?
So this is our fourth method.
And it's a hybrid method becausewhat I noticed is we started
(15:42):
doing a hybrid method whichmeant we started as a snowball
method where there was some realannoying small balances and we
got those things gone and out ofthe way quickly and then it
became a four legged race herewith we had four various loans
so we quickly went from down tofour.
(16:03):
When we got down to four, wesuddenly switched to this
avalanche method where westarted paying down the highest
interest loans first and workedour way through there and one by
one, knocked our way throughthose.
And it also came with thesnowflake method.
So whenever New money came in orextra money would come in.
(16:25):
We would allocate that makingthose extra payments in order to
get out of, and we didn't have aton of sacrifice.
We're in a different positionincome wise.
So this is also really importantthat when you're paying this
off, that if you have buffer ormargin in your monthly Budget or
(16:49):
financial plan, then you havemore slack to do this.
Some people who are just livingpaycheck to paycheck, trying to
get by.
This is where maybe only thesnowflake method would work and
a snowball and avalanche have.
Have more buffer in there tofocus extra money and then add
(17:10):
in the snowflakes, if you will,when you have new money coming
in.
So that's what we used as ahybrid or a variety of the
different ones.
And the best news around that isthat it finally ends.
You just get it done when thatmoney is gone.
All of a sudden, if you're nottotally depriving yourself of
(17:35):
expenses.
And you're still living a goodlife, suddenly, that money that
you have at the end of everymonth, or the extra payments
that are coming in, suddenlydon't have to go to this fucking
debt anymore.
It can go to something way morefun.
So now, it was, it's reallynice, because we've already been
(17:56):
maxing out 401ks and doing allthat.
But now Our conversation hastruly come to life around all
this extra money doesn't have togo towards that bullshit anymore
It's going to go towards when wegot investing and we're starting
to think about Leaning into ourbackdoor Ross and our HSA's and
(18:21):
Mega backdoors like this wholenew world of next level
investing comes to And so Idon't have content in the money
strong for college studentsaround that level of savings and
investing.
But I will have that in ourversion that we're making as
(18:42):
well called money strong foradults.
And we'll run that throughemployers as well.
So anyway, we've recapped therepayment strategies.
And if somebody asks me, how doI, which method should I use to
get out of debt?
My cheeky answer will be yes,because it is up to you, which
(19:04):
one you think is going to be themost appropriate.
My intention is to try to guideyou and to get you to the other
side.
So you get out of debt.
So then you can have that extramoney going towards investing,
wealth building.
generational building aroundthat.
I'm going to leave you at that.
So thank you very much.
If you've made it this far, Iappreciate you listening.
(19:25):
And if you need anything fromme, you can always contact me,
Brian Foltis.
com moneystrong.
com is underway here.
You can find me on Instagram, onYouTube for a lot of content,
and I would love to hear fromyou.
If you like what you hear,please make sure you like and
subscribe so you never missanother episode of this show.
(19:46):
And I friends will stop talkingand we will see you on the next
episode.
Have a great day.
Thanks.
Bye.
Thank you for tuning in toanother episode of the Brian
Foltis behavioral financepodcast.
We hope you found ourexploration into the fascinating
world of human behavior andfinance, both enlightening and
thought provoking.
(20:06):
Be sure to subscribe for futureepisodes and until next time
stay curious and financiallysavvy
Welcome to the Brian Foltisbehavioral finance podcast,
where we unravel the mysteriesof behavioral finance and unlock
the secrets to making smarter,more informed decisions with
your money.
Now, here's your host, Dr.
Brian Foltis.
Hello, and welcome everybody tothe Brian Foltis behavioral
finance podcast.
(00:25):
My name is Brian Foltis.
And today Day we are going totalk about debt repayment
strategies and learn about thedifferent types of strategies
and be able to talk the samelanguage around those and try to
choose one that fits yourself orat least those around you that
(00:45):
you're trying to help out ifyou're not in debt, to maximize
their efficiency in order toget.
Out of this thing calledconsumer debt.
And we see this rising each day,the numbers in the U S keep
rising.
We're starting to talk intrillions and that's just for
(01:06):
credit card debt and peoplemaxing out credit cards, getting
into this debt and my wholevoice here is trying to get
people.
Out of debt as fast as possibleand efficiently as possible.
And this comes off the back ofthe.
(01:27):
Money Strong program that isalmost ready to go.
It's all getting organized andset up and getting ready to
launch here in the next month.
And I'm super excited to getthat rolled out here around
spring break time.
And when we talk about gettingout of debt, we talk about the
(01:49):
different repayment strategies.
That's what we're going to talkabout today.
When we come back, we're goingto talk again about the
different intensity levels andwe're just going to break down
the different intensity levels.
And my approach to working yourway through debt is not a one
(02:09):
approach method.
Mine's a little bit differentand what I want to Is I want to
take a step back, lay out thedifferent methods, have people
choose which one best fits them,because not everyone is going to
follow the same method, noteverybody is going to thrive
(02:31):
under the same intensity levels,and so you're going to notice
here when we have old schoolDave Ramsey talking about the
snowball method and that's theway to go.
For some people that's totallyfine.
We're going to break that down,why that's good, why it might
not be good.
And then the same thing with theintensity levels that it's just
(02:53):
all in until you can't do itanymore.
And then you're just going torice and beans this until you
get out of debt.
And I think that has a reallygood intention behind it, but it
often fails because peoplearen't always wired like that to
just go hardcore in order toreach their goals.
(03:13):
And that's where I want us totake a step back and try to
identify, Hey, I'm this type ofperson, or I'm not this type of
person.
And we'll get into that methodin that future episode.
But I'm excited to talk aboutthat because I think we need to
really Break it down in a waydifferent way instead of saying
with a heavy hand, like this isthe only way you either do it or
(03:35):
you don't.
And so when we're talking aboutthese repayment methods when I'm
talking to students who aregraduating college, a lot of it
revolves around student loansand trying to repay those
student loans.
Where does that fit in with?
all of the other financial goalsand my retirement savings and
(03:57):
how do I allocate that or how doI strategize that.
So here's some of my thoughtsaround that.
First of all, before we starttalking about the repayment
method, when we get a job out ofcollege, we're going to take a
look at our employer's offeringsfor retirement.
And usually without, I haven'tseen an exception, but if the
(04:23):
employer is offering some sortof repayment or matching plan,
we're going to take that freemoney.
So even if you have debt, takethat retirement contribution.
And get that free money, even ifthey're matching 25 to 50
percent in the world of finance,I have not seen any guaranteed
returns of 25 to 50 percent inmy world.
(04:43):
And so we're going to hop onthat.
Sometimes you do have to jumpinto the employee handbook to
see this really nice benefit.
It's not always flashing.
In lights on that benefithandbook, but we want to
definitely look through See whatthat is and set that up before
you get your first paycheckThat's usually how I tell
(05:06):
students to work on theirretirement contributions while
working on paying down the debtand then If you don't have any
debt Then I say we have to takethe contribution matching, and
usually between 10 to 15 percentwe're going to set aside for
retirement before you see thatfirst paycheck, so you're not
(05:27):
tempted to spend it, and startmaking some mental accounting
notes around how you're going tospend that money, and then, so
that's what I'm saying, if youelect your contribution after
your first paycheck, it's goingto be considered like as a loss,
and so you're going to have tocut and make some, even if it is
just mental, so just Take thatcontribution out before you get
(05:52):
your first paycheck and you willnever miss it because you'll
never know what you're missing.
And you can do that as a 22 yearold coming right out of college.
Then you're just settingyourself up.
You don't really have to do muchelse over time because now time
is on your side and it's goingto be working for you.
Nevertheless, friends today.
(06:12):
These repayment strategies thatwe're going to talk about, I've
got three of them and then I'vegot my own fourth one that I'm
going to make, but I figuredthat these three repayment
strategies are.
Nice to talk about or prettyapplicable today as I'm sitting
here in my home office in themiddle of February in
(06:35):
Indianapolis, Indiana, lookingat the snow outside and having
walked my dog in the negativeseven degree.
That's Fahrenheit, windshield,then I feel like these payment
strategies are prettyappropriate right now.
First one, this is the popularsnowball method.
(06:58):
So the repayment strategy, youhave this debt, we're going to
line them up.
As a snowball method, and we'regoing to try to pay off the
small balances first of thatfirst in line has the smallest
balance, and then we'll stackthem up in order from smallest
balance to largest balance, andthis actually has some benefits
(07:23):
to it, and we're not reallydiscriminating against the
different interest rates thatwe're paying on it.
What we're essentially trying todo is just get some momentum,
get some small wins.
Get some clarity and clean up onif we have a number or a large
number of debts starts to cleanup.
(07:44):
So there's some emotional winsbehind that.
And that's why I think DaveRamsey really likes to push that
because it starts to get somemomentum, builds that emotional
aspect that we can't overlookhere as we're starting to.
Work our way out of debt and sothe snowmobile method that's
(08:07):
been this commonly acceptedmethod to pay off loans.
The con though around thesnowball method is that the
smallest to largest balancedoesn't discriminate against
interest rates.
So what I mean by that is if youhave small balances with small
(08:30):
interest rates, then, and youhave big balances with high
interest rates making minimumpayments on your large balances
while you're knocking out thesmall ones is a gonna
mathematically accrue moreinterest.
over time.
So you might be paying a lotmore interest based on your
circumstances.
(08:50):
If you are doing this snowballmethod.
Now, if you have marginallydifferent numbers from an
interest rate standpoint, over ashort amount of time, this is
not going to really have asignificant effect on overall
interest paid.
But it's definitely somethingthat you want to keep an eye on.
(09:10):
If you have an outlier, you wantthat is super high in interest
rate compared to your otherdebts.
Let's scrap the snowmall methodand let's start attacking that
one ugly duckling that's in yourdebt portfolio and get that out
of the way.
And actually.
(09:31):
That is the second repaymentstrategy.
So instead of the snowballstrategy, we're going to work on
the avalanche strategy.
Now avalanche strategy reordersyour debts based on high
interest loans first.
So here we basically sort itfrom top to bottom based on
highest interest.
(09:52):
That.
Is from a mathematicalstandpoint going to save you the
most money on interest paid.
Now, you don't always have thepsychological wins because you
might, and here's what I mean bypsychological wins.
If you have a high interest,high balance loan at the top of
(10:12):
your list and you're workingyour way through it, you're
slugging your way through it andit's not going away.
This is where you don't getthose mental wins.
And that's where on paper, yes,avalanche method is the best for
interest paid.
And, but in reality, if you getfrustrated or bogged down and it
(10:35):
leads you to.
inaction, then this is not thething for you.
And that's where this comes downto the individual and really
taking a step back going.
I need some mental wins or Ireally just want to get these
annoying debts out and I wantthem out of my life.
(10:57):
And then I will just move on andI'm not going to do this
anymore.
If you are stacking these up andjust know I'm going to get
frustrated or I'm really not,I'm not sure how to do this.
Then you want to do the snowballmethod, trying to pay those
small balances first.
So you have the snowball method,paying off small balances first.
(11:18):
You have the avalanche method.
That works on paying highinterest loans first.
And then you have what we callthe snowflake method.
So you have these two largebodies with snowball and that's
supposed to, as it rolls downthe hill, that's the idea.
The snowball gets larger.
That's the momentum.
That's the wind.
(11:39):
The avalanche is just trying toknock it all out in the most
efficient way possible.
Stacking them up by loans tosave money on interest.
Snowflake is making smallincremental extra payments,
small incremental extrapayments.
Now you can use the snowflakemethod in isolation.
So making minimum payments andthen these small incremental
(12:02):
payments come in on the side andthat's fine.
But what I would like to see isusing the snowflake method in
conjunction.
or with the snowmall andavalanche method.
So you have your plan thatyou're trying to execute in
order to get out of debtregardless of whether you're
(12:24):
stacking them by balance or ifyou're stacking your loans by
interest rate and then wheneveryou have new money coming in
that is adding to the snowballor that is adding to the
avalanche not just in isolationand what we mean by these the
snowflake small incrementalpayments This is where the side
(12:45):
gigs or we'll talk more aboutthat too, because I've noticed
there's some debate aroundwhether or not, these side
hustles are good, or how doesthat fit our overall life
purpose and life plan?
And I definitely have somestrong feelings around that as
well.
And then, or if you're sellingitems, just different things
(13:06):
like that, any extra moneycoming in your you're selling
pictures of your feet orsomething online and you get an
extra money for that, thenthat's going to be where that
money goes.
Maybe more applicable is goingto be.
Tax refunds coming in you getyour tax refund.
This is ultimately thisbehavioral decision of all right
(13:28):
How do I account for this?
so we say that this money comingin is going to be mentally
treated differently as earnedmoney and this is where people
go and buy their big screen TVsand really go crazy with their
newfound money that they getfrom these tax returns when
could be used in the snowflakemethod to just pay off your debt
(13:52):
or to be treated as earnedincome and Saved or invested or
used to pay back loansappropriately.
We've got the three methods AndI realized okay, that's this
good I at least now when we'retalking about how you're going
to get out of debt then studentsand people can We can talk the
(14:14):
same language, I'm using thesnowball method, or I'm using
the avalanche method, got thesnowflake method working.
I love that.
I think that's a really goodthing to be able to have a more
comprehensive look.
Instead of me standing heregoing, we're going to do the
snowball method because I saidso.
We're going to have a morecomplete conversation around
this.
(14:35):
I'll add a little monkey wrenchin here because when Mandy and I
got married.
I just mentioned a month or twoago that she came with her
student loans she was stillpaying off and that was to the
tune of about$42,000.
And when that happened, I got tosee what that looks like.
(14:57):
'cause it had been a while sinceI had gotten out of my student
loans.
And I usually had mine groupedjust in one clump and.
That's how I remember paying offmy loan.
It was just a clump and it'sworking to work your way down.
Hers came in a variety ofdifferent amounts and different
(15:18):
interest rates.
And there wasn't too muchdiscrepancy around the interest
rates, but there was adifference between some of them
and.
I thought to myself here's agreat case study around how do
we get out of debt?
Or what would be our method inorder to do this?
So this is our fourth method.
And it's a hybrid method becausewhat I noticed is we started
(15:42):
doing a hybrid method whichmeant we started as a snowball
method where there was some realannoying small balances and we
got those things gone and out ofthe way quickly and then it
became a four legged race herewith we had four various loans
so we quickly went from down tofour.
(16:03):
When we got down to four, wesuddenly switched to this
avalanche method where westarted paying down the highest
interest loans first and workedour way through there and one by
one, knocked our way throughthose.
And it also came with thesnowflake method.
So whenever New money came in orextra money would come in.
(16:25):
We would allocate that makingthose extra payments in order to
get out of, and we didn't have aton of sacrifice.
We're in a different positionincome wise.
So this is also really importantthat when you're paying this
off, that if you have buffer ormargin in your monthly Budget or
(16:49):
financial plan, then you havemore slack to do this.
Some people who are just livingpaycheck to paycheck, trying to
get by.
This is where maybe only thesnowflake method would work and
a snowball and avalanche have.
Have more buffer in there tofocus extra money and then add
(17:10):
in the snowflakes, if you will,when you have new money coming
in.
So that's what we used as ahybrid or a variety of the
different ones.
And the best news around that isthat it finally ends.
You just get it done when thatmoney is gone.
All of a sudden, if you're nottotally depriving yourself of
(17:35):
expenses.
And you're still living a goodlife, suddenly, that money that
you have at the end of everymonth, or the extra payments
that are coming in, suddenlydon't have to go to this fucking
debt anymore.
It can go to something way morefun.
So now, it was, it's reallynice, because we've already been
(17:56):
maxing out 401ks and doing allthat.
But now Our conversation hastruly come to life around all
this extra money doesn't have togo towards that bullshit anymore
It's going to go towards when wegot investing and we're starting
to think about Leaning into ourbackdoor Ross and our HSA's and
(18:21):
Mega backdoors like this wholenew world of next level
investing comes to And so Idon't have content in the money
strong for college studentsaround that level of savings and
investing.
But I will have that in ourversion that we're making as
(18:42):
well called money strong foradults.
And we'll run that throughemployers as well.
So anyway, we've recapped therepayment strategies.
And if somebody asks me, how doI, which method should I use to
get out of debt?
My cheeky answer will be yes,because it is up to you, which
(19:04):
one you think is going to be themost appropriate.
My intention is to try to guideyou and to get you to the other
side.
So you get out of debt.
So then you can have that extramoney going towards investing,
wealth building.
generational building aroundthat.
I'm going to leave you at that.
So thank you very much.
If you've made it this far, Iappreciate you listening.
(19:25):
And if you need anything fromme, you can always contact me,
Brian Foltis.
com moneystrong.
com is underway here.
You can find me on Instagram, onYouTube for a lot of content,
and I would love to hear fromyou.
If you like what you hear,please make sure you like and
subscribe so you never missanother episode of this show.
(19:46):
And I friends will stop talkingand we will see you on the next
episode.
Have a great day.
Thanks.
Bye.
Thank you for tuning in toanother episode of the Brian
Foltis behavioral financepodcast.
We hope you found ourexploration into the fascinating
world of human behavior andfinance, both enlightening and
thought provoking.
(20:06):
Be sure to subscribe for futureepisodes and until next time
stay curious and financiallysavvy
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