A MONEY blogger paid off more than $99,000 in debt in five years by adapting popular methods to get out of the red – and you can do it too.
Sahirenys Pierce and her husband Freddie, aged 30 and 32, had racked up student and car loan debt, but were lucky not to have any consumer debt.
Sahirenys Pierce paid off $99,000 in debt in five years together with her husband Freddie[/caption]
As Sahirenys, who runs the Poised Lifestyle blog, was entering the financial services industry several years ago, the couple decided to cut down.
The married duo now lives in San Diego, California, with their two kids aged three and five – Raelyn and Lee.
In a recent YouTube video, Sahirenys said they realised there were only two main ways to pay off the debt – the snowball and the avalanche method.
The snowball method suggests starting with the smallest debts, which can be effective for people who struggle to stick to a debt payment plan.
How to get debt help for free
IF you’re struggling to pay your debts month after month it’s important you get advice as soon as possible, before they build up even further.
You can get free or low-cost credit counseling options at credit unions
extension offices, religious organizations and nonprofit agencies.
A reputable credit counseling agency should send you free information about itself and the services it provides without requiring you to provide any details about your situation, according to the Federal Trade Commission.
If a firm doesn’t do that, consider it a red flag and go elsewhere for help.
Before you get help, also make sure they’re accredited by either the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Assoction of America (FCAA).
You can contact the NFCC for help through its website or by calling 800.388.2227.
While the more traditional avalanche method means you tackle the the largest, highest interest debt first, helping to reducing interest payments.
To get out of the red, Sahirenys and Freddie modified the methods to make them fit their family’s needs.
She told The Sun the amount the couple paid off each month varied a lot, and sometimes it meant they only made the minimum payments.
However, anything extra they had at the end of each month went towards the debt.
She said: “When we first started off paying our student and car loans, we actually used the snowball method.
“We found it more motivating and exciting. You see the progress of knocking down those student loans, little by little.”
However, as they got more comfortable, the couple switched to the avalanche method for the car loans.
Sahirenys said: “We focused on the car loan that had the highest interest rate. It cost us the most to keep at the time.”
Five years after they began, in 2019, the couple were no longer in the red and debt free.
The pair had also built up an emergency fund that’d cover bills and other essentials for a few months if one of them suddenly lost their job.
Sahirenys added: “The moral to the story is to feel free to modify the snowball or the avalanche method to fit your reality and to help you pay off your debt.”
The Latina money expert said she’s always been passionate about helping others with money, but decided to share her journey online because “no one that looked like me was getting help from financial professionals”.
When the children were born, she became a full-time mom and now runs her business on the side to help her community with money management.
You can follow Sahirenys’ journey on Instagram, where she has almost 35,000 followers.
The two debt methods explained
Traditional financial advice has been to tackle the largest, highest interest debt first – but the “snowball method” has the opposite approach.
It suggests starting with the smallest debts can be most effective for people who struggle to make a debt payment plan and stick to it.
Fans of the method believe that paying off smaller balances can keep people motivated and on track.
This is because you get the regular satisfaction of knowing you have paid off a debt or closed an account.
Also, if you’re being bombarded with debt letters and repayment calls, clearing some of the smallest balances can reduce the noise and stress of being in debt, even if the largest debt remains.
Just make sure you still double check which debts are most likely to lead to court action or losing your home if you don’t pay them.
Certain tax obligations, your rent or mortgage, and child support should typically be paid first.
The downside of this is that it can cost you more over time because some of your bigger debts might have higher interest rates.
The avalanche method is the opposite of the snowball technique.
It means you look at what you owe and focus your attention and cash on repaying the debts with the highest rates first, as they’ll cost you the most.
This way of repaying may be less satisfying if the debts with the highest rates are also the largest, meaning they’ll take longer to pay off.
However, you will save more in interest over the long-term.
Similar to the snowball method, you still need to make sure you check which bills are priority.
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A thrifty mum who saved $35,000 in one year recently revealed how decluttering your home could save you thousands.
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Earlier this year, a nurse revealed how she was inspired to pay off $260,000 in eight months by Dave Ramsey.
Source: The Sun
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