Debt Snowball
What is the debt snowball method?
The debt snowball method is a strategy where you pay off your smallest debt first, then move to the next smallest, and so on, until all debts are paid off.
What is an emergency fund?
An emergency fund is money set aside for unexpected expenses, such as medical bills, car repairs, or job loss.
What is a budget?
A budget is a plan for managing your income and expenses, ensuring that you can cover your needs, wants, and savings goals.
What is one way to cut costs on groceries?
Meal planning and creating a grocery list can help reduce impulse buys and avoid purchasing unnecessary items.
What is a 401(k)?
A 401(k) is a retirement savings account
To help jumpstart your debt snowball, what should you do?
Side hustles, sell items, cut back on spending
How much should you have in your emergency fund?
1,000
What is an example of a “need” in a budget?
An example of a need is housing, such as rent or mortgage payments, utilities, and basic transportation.
How can canceling unused subscriptions save money?
By eliminating subscriptions you no longer use or need, you can free up extra funds each month.
How many can you contribute to ROTH IRA each year?
$7,000 if you're under 50
$8,000 if you're 50 or older
What kind of debt do you focus on in debt snowball? The smallest or the biggest?
Start with the smallest
How much should you have in your fully finished emergency fund?
3-6 months worth of savings
What is a zero-based budgeting?
A zero-based budget is where every dollar of income is assigned a purpose
What is one way to make extra money?
Sidehustles or selling items
What is a 529 plan?
College savings account that grows tax free
After you pay off one debt, what do you do with the money you were using to pay that debt?
Move it to the next debt payment
Why is it important not to dip into your emergency fund for non-emergencies?
Using your emergency fund for non-emergencies depletes the money you may need for a true financial crisis, leaving you unprepared.
What’s a budgeting method where you prioritize paying off debt from smallest to largest balance?
The debt snowball method.
What is a good strategy to reduce dining-out expenses?
Plan meals and cook at home more often, limiting dining out to special occasions.
What is the best strategy to pay off your mortgage faster?
Make extra payments each month
If you have a large amount of debt, what is the first step you should take before starting the Debt Snowball method?
Build an emergency fund of 1,000
What type of account is best for keeping your emergency fund?
A high-yield savings account is ideal because it allows you to earn interest on the fund while keeping the money accessible.
What is the key benefit of using an allocated spending plan for budgeting?
The key benefit is that it helps you track where your money is going, ensures all categories are covered, and prevents overspending in any one area.
What is the 100 Envelope Challenge, and how can it help you save money?
The 100 Envelope Challenge involves saving money by putting different amounts (from $1 to $100) in envelopes each week. It helps you save $5,000 by the end of the challenge.
What percentage of your income should you aim to invest annually for retirement?
15%