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101 Financial’s Approach to Debt Elimination

Snowball rolling down a hill

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For long-term financial success, 101 Financial’s approach beats the snowball method as a debt repayment strategy. While the snowball method can be effective in quickly eliminating small debts, it may not be the best approach for long-term financial success. That’s where 101 Financial’s approach to debt elimination stands out.

Snowball Method

The Snowball Method is a debt repayment strategy that eliminates debts from smallest to largest.  Start by paying off the smallest debt first while making minimum payments on other debts. Once the smallest debt is paid off, add that payment amount towards the next smallest debt. This creates a “snowball” effect. As you pay off each debt, you free up more money to pay off larger debts. Do this until you pay off all debts.

How the debt snowball method works
  1. List your liabilities/debts from smallest to largest balance (regardless of the interest rate).
  2. Make minimum payments on  your debts except the smallest “target” debt.
  3. Pay as much as you can on your smallest debt.
  4. As you pay off one debt, use the money you would have spent making the monthly payment on the next target debt. Keep doing that until all debts are repaid.


The 101 Financial Method

Unlike the debt snowball method, which focuses on paying off debts in order of smallest to largest balance regardless of interest rate, 101 Financial’s approach prioritizes paying off debts with the highest interest rates first. By tackling high-interest debt first, you can save money and time in the long run and achieve debt freedom more quickly.

How the 101 Financial System works

The 101 Financial system is a comprehensive personal finance system that:

  • Improves cash flow by optimizing budgeting and building financial road maps
  • Builds and manages credit
  • Utilizes smart banking with a Debt Checking Account
  • Provides personalized coaching to help you every step of the way
  • Applies innovative debt repayment strategies


Comparative Analysis

Mathematically, you can pay off debt faster with the 101 approach than the standard debt snowball. Paying off a debt with the highest interest rates first will save you time and money overall. This is because of how daily compounded interest rates work.

Daily Compounded Interest

Daily compounded interest is a method of calculating the interest on a loan or investment where interest is calculated and added to the balance on a daily basis. This means that each day, the interest for that day is calculated based on the current balance of the loan or investment, and then added to the total balance. The next day, the interest is calculated again based on the new balance, and so on. This results in a compounding effect that increases the interest earned or charged. Banks and financial institutions commonly use the daily compounding method for savings accounts, certificates of deposit (CDs), and loans. It is more favorable to the account holder or borrower than simple interest, which calculates interest only on the initial principal balance.

Method vs. System

101 Financial’s approach centers around a comprehensive financial plan that takes into account your entire financial picture. Your financial picture includes income, expenses, savings, investments, and debt. We work with you to create a personalized plan that not only eliminates debt, but also sets you on the path to long-term financial success.

Our approach to debt elimination also emphasizes building a strong financial foundation. This includes establishing an emergency fund and saving for retirement. Doing so ensures that you’re not only eliminating debt, but also setting yourself up for future financial stability.



Overall, while the debt snowball method may work for some people in the short term, it may not be the best approach for long-term financial success. 101 Financial’s approach to debt elimination focuses on a comprehensive financial plan. It builds a strong financial foundation and can help you achieve debt freedom and a bright financial future. Contact us today to learn more about our approach and how we can help you achieve your financial goals.

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