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How to pay off your debt fast without sacrificing your lifestyle

Everything you need to know about the Debt Snowball Method

What if I told you there was a way to pay off your debts minus the usual stresses and without having to give up your lifestyle?

Sounds like a dream right!

It may seem impossible, but you’ll be pleased to learn there is a proven method you can follow to wipe out your debts on your path to financial security and happiness; and it begins by changing your approach.

When you think about debt, most people tend to focus on the total number they owe. Debt becomes this big grey immovable object, and it’s this very mindset that could be holding you back from becoming debt-free.

Rather than take this approach, here is the smarter way.

It’s time to tackle it one step at a time. In all areas of life many small steps lead to big, life-changing outcomes – and eliminating your debt is no different.

Why is becoming debt-free so important?

Carrying debt through life isn’t always a big problem, so long as it serves a meaningful purpose, and you have the capacity to service the repayments. Where debt does become a big problem is when you approach or enter retirement years, or when you are paying exorbitant interest rates with little benefit.

Personal loans are a great example here. In fact, more than 1 in 5 Australians 1 have, or will have, a personal loan in the next six months. With the average personal loan being between $15K – $16K 2 –  for a new car, a wedding or to pay off existing debt – it’s no wonder Australians are struggling to become debt-free.

How do you pay off your debt sooner?

Luckily, there is a faster, easier and more rewarding method you can use on your path to financial freedom…

…and it starts by understanding that paying off debt is like building a big snowball.

How, you ask?

Well, the best way to build a big snowball is to start with a little snowball. It’ll need a little work to give it momentum, but when pushed in the right direction pretty soon you’ll have a huge boulder of snow.

The best way to pay off debt is also to start small. Start with your smallest debt and then build traction until you end up tackling your biggest debt face first until you owe absolutely nothing!

This is the Debt Snowball Method – the life-changing way you can become debt-free faster and easier than ever before.

How does the Debt Snowball Method work?

The goal of the method it to reduce the amount you owe by paying off your debts from smallest to largest.

Here’s 5 simple steps for becoming debt-free using the Debt Snowball Method:

  1. Make a list of all your debts (except for your home loan). Pro Tip: Putting pen to paper and having all of your debts laid out in front of you can be enormously overwhelming. But take comfort in knowing this is the first step in your plan.
  2. Order your debts from smallest to largest.
  3. Make minimum payments on every debt except the smallest one.
  4. Make the highest repayments you can afford towards the smallest debt until it is gone. Pro Tip: This may mean budgeting a little bit tighter or minimising luxury purchases for a small while.
  5. Repeat until you are 100% debt-free.

Simple enough right?

Obviously, you’re not going to become debt free overnight, but you will begin to build the kind of momentum and sense of satisfaction that will see you stay the course.

Once you have paid off the first debt (no matter how small), you’re on your way forward. Even the smallest amount of progress can help immensely and suddenly, becoming debt-free is an achievable reality!

What’s more, once you get rid of the smallest debt, it gets a little easier. You can put the extra money you were paying towards that debt into the next smallest debt to gain even more momentum – build that snowball!

Don’t just take our word for it, researchers 3 across the world are also getting behind the Debt Snowball debt-free method too.

Is the Debt Snowball Method for me?

An important point to clarify here is that the Debt Snowball Method is one of many different options you can consider when it comes to paying off your debt. Some people prefer to tackle loans with the highest interest rate first, instead of the loan with the smallest balance – as is the case with the Debt Snowball.

In our experience we have noticed that it’s often debts with relatively low balances that carry incredibly high interest costs – things like credit cards, store cards, deferred payment plans and personal loans.

The Debt Snowball Method is all about making real progress and rewarding yourself for the small wins. It can help you stay on track to pay off your debt sooner.

It’s less about the numbers and more about changing your mindset and behaviour.

When you start to see the plan working, it can be really exciting and just the motivation you need to stick with the plan and build your future. Once you develop good money habits, it gets easier and easier.

You know you better than anyone. If you know that starting small and rewarding yourself for the small achievements will motivate you, the Debt Snowball Method could work for you!

Start planning for your debt-free life using this Debt Snowball Calculator. 4

Once you’re out of debt, you will have all this money leftover that you can spend, save or invest. Suddenly, the world is your oyster!


Newcastle Financial Planning Group can help you take control of your finances and reduce your debt. Our expert financial advisers can help establish your big life goals and create a strategy that’ll see you achieve them sooner.

Are you looking to wipe out your debts, secure your retirement sooner and without all the usual stress? Schedule a complimentary initial call with one of experienced Financial Advisers. We have offices located in The Junction (NFPG), Erina (CCFPG) and Sydney CBD (SWA) and are here to help you secure the kind of future you’ve always wanted.


1: https://www.finder.com.au/personal-loan-statistics
2: https://www.plenti.com.au/personal-loans/statistics/
3: https://academic.oup.com/jcr/article-abstract/43/3/460/2200459
4: https://calculator.me/loan/accelerated-payoff.php

The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group and Sydney Wealth Advisers are subsidiaries of Coastal Advice Group which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.

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