Training Your Wealth Accumulation Muscle

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Spend less than earned. Accumulating wealth is easier said than done. Accumulating snow and turning it into a snowman however, never felt that difficult. We start with a handful then roll it on the ground until it gets really big. It turns out that the method to building a snowman, called the snowball method, is the most effective way to pay off debt. I am proposing that it can also be an effective way to build our wealth accumulation muscle.

The snowball method can be similarly applied to how we build wealth. We start with small wins that gets us immediately hooked to the challenge to better the previous win. It keeps going and rolling until we reach the big win.

Let's play a game!

You'd like to save $2000, that is your created imaginary debt. Split your debt unequally in amounts that you need to pay off and prepare envelopes for payments to the debt. The maximum split is 5, but let's say you have split it up into 4 different debts of $100, $400, $700 and $800 totaling to $2000. Search "average credit card interest rate" on Google, you'll have an average number for all those debts, in this article's case it's 15.6 percent.  

Now, you might be asking why maximum split of 5? Because we'll be using Bankrate's minimum payment calculator and it gives the maximum of 5. The rule is you need to pay all the cards monthly, so if you're focusing on one card with the lowest balance, you'll need to pay the other cards at minimum. Enter the debt amount, interest rate and minimum payment percentage to get your minimum amount. 

Can we fix our finances? Yes!

Can we pay off our debt? Yes!

Can we build wealth? Yes, we can!