You have been making an honest effort to pay off your debts. Each month, with the money you have diligently set aside, you make a payment above the minimum balance to all of your accounts. Unfortunately, progress is slow. You are barely making a dent and the thought of continuing this pattern for several years to come is just painful. With no extra funds for higher payments, it is easy to feel like debt has swallowed you whole. Luckily, Ovation has the perfect tool.
Sometimes paying more than the minimum balance isn’t enough, particularly if the debt is substantial. Although initially it may sound like we are telling you to do the very thing we always advise against, desperate times call for desperate measures. Besides, the Minimum Payments with Snowball tool is no ordinary payment schedule. When using this strategy, only the minimum payments will be made for each debt. The funds that are leftover from what you budgeted for monthly payments can then be applied to the account with the highest interest rate.
This schedule uses the newly freed funds to pay down your other debts at a much quicker pace. As you continue to make payments, the amount of money available after making minimum payments will grow. By making these minimum payments, you are still meeting the required monthly demands, while allotting more money to a specific account. This will always result in paying off debts faster than with minimum payments alone.
The snowball effect that is implied is quite accurate. With each debt that is paid off, there are more funds available. For example, you may owe $500, $1,000 and $2,000 on three different cards. If you have $300 per month to spend on paying down debt and the minimum payments only total $200, rather than spreading that extra $100 to all three cards, focus all of it on the card with the highest interest rate. As soon as one account is fully paid off, you then have $150 extra to pay toward the other two.
For people with multiple accounts, those extra funds could add up quickly.
Minimum Payment with Snowball provides results you can see at a faster pace, ultimately reducing your debt. The biggest advantage of this plan is that it requires no additional funds to be set aside, which is great for those working with a tight budget. This plan, combined with frugal spending, can make you debt-free in no time. Financial freedom is accessible through several other Ovation Tools as well, allowing you to find the perfect individualized payment plan.