The Science of Flipping - Is The Debt Snowball The Right Way To Payoff Your Debt?

Episode Date: February 23, 2021

Is The Debt Snowball The Right Way To Payoff Your Debt

What's up everybody welcome back to another video I am Justin Colby and in this video We are gonna ask the big question is Dave Ramsey. Yes the Dave Ramsey Correct about his snow ball method payoff for your credit cards and getting out of debt Is it right for you? Stay tuned What's up everybody welcome back to another video I am Justin Colby and on this channel we talk all things real estate business and entrepreneurship now one of the biggest names within the finance space of life, I guess you would say, is Mr. Dave Ramsey. He is everywhere. He is on the radio. He has a podcast. He has best-selling books. He is in churches. He is everywhere. And he is well known as one of the best and most educated financial gurus in the space, but is his snowball strategy,

which is basically a strategy to pay off your debts, the right strategy for you? And I'll be honest, I tend to challenge it. Now, you have to make your own decision and I am not a educated financial wizard. However, I know this strategy very well. As a matter of fact, I have used it. That is why I am going to likely challenge it.

Now, the concept of the snowball payoff strategy, I think that's even the technical term, is simply lining up all your credit card debts and all your debts as a whole, starting with the interest rate that is the highest and all the way down to the lowest and start overpaying the interest rate that is the highest and get that totally paid off and make the remaining of your payments for all the list of other debts at a minimum so the overpayment goes to the one that has the highest interest rate that is how it can be the most efficient and speedy way although some people will say start with your highest debt no matter what type of interest rate I

Want to make sure I'm paying off the highest interest rate because that's what's gonna eat up all of your money Anyways, and that is why we're shooting this video now If this is so far interesting to you, please smash that like button. Make sure to hit the subscribe button. The YouTube gods love it that way. They help my videos get out there. So again, hit that like button. Hit the subscribe button.

And so with that said, I want to talk a little bit further. Now, let's just say that the normal human being has four credit cards and you have a decent amount of money on each of them. You might even be maxed out on them. human being has four credit cards and you have a decent amount of money on each of them, you might even be maxed out on them. And what I am going to challenge right now, why I don't believe it's always the best move to pay off your debt, is for one big reason. Do you have the ability to make more money? And if you have the ability to make more money, can you place your money in a new venture or maybe rentals, hint, hint, that can start creating you passive income that you don't

have to work and you can take that passive income to pay off your credit card debt. Now, listen, over the years, I have found myself in plenty of credit card debt. So I'm not judging anybody on here. If you are eyeballs deep into credit card debt, I myself had to walk away from $40,000 of credit card debt back in 08, 09, when I lost my world financially, my home went to foreclosure, repo man took my car. And as I mentioned, I walked away with over $40,000 in credit card debt. And I learned a big lesson, which is if you can't pay it cash, you shouldn't be buying it anyways. Now, with that said, I have since opened several credit cards and I, yes, have used those credit cards, but there is one distinguishing factor of whether I'm going to go out and pay

it all off in a snowball type method, or is there a way to create more income into my life that I can use that income to pay off the credit cards? Or even better, again, big shocker, if I can use that money that I'm making instead of paying off the credit cards, put it into potentially a rental. And you'll want to stay tuned to the end of this video because I'm going to talk about some options for your 2021 life and income that could really blow your mind, especially if you have any interest in real estate. So my first thing is, is there a way to drive more money into my piggy bank to pay off that credit card debt rather than just simply living super, super lean and paying them off and not taking the money I'm making and investing it in other opportunities such as real estate

that could start to pay me back a dividend, which would be the rents. Now, obviously, I'm a big real estate guy. This is what I've done for over 13 years. I've flipped over 1,600 homes. But the idea here is this. If you have a way to create an annuity of sorts that will continue to pay you whether you work or not, such as a rental property, then I have a big point that I'd like to make which would be if you had 50 grand to go pay off all the credit card debts is the right decision to take that 50 grand to pay off the

credit card debts or the right decision to maybe to go buy one or two rentals that might make you anywhere from 200200, $300, $500 a month and take that money to pay off your credit card debts. I pose the question to you. I want you to think about it. The way I tend to lean financially, again, removing a lot of different nuances in people's lives, I tend to lean go create more money,

go create more revenue, and take that revenue to pay off your debt. As a matter of fact, in complete transparency, I had an amazing wedding this year in January. That was very expensive. Now I wanted the points and I wanted the airline miles and I wanted the hotel points. So I did end up paying it on credit card. And this goes against what I just mentioned saying, if I have the, I only do things that I have cash. So there was an extra reason because I wanted the points. Now what I did do to pay off those credit cards is I

actually created another revenue stream that had just brought in the money to pay off those credit cards. I didn't take it from the income I was earning as a real estate investor per se I created whether it was a side hustle and or other real estate ventures that has now paid me more than I typically would make and I took that money pay taxes by the way and then I paid off those credit cards that was my way of doing it. And in my opinion, that could be the smarter way for you to do it as well. Everyone wants to make

more money. Why not take that money and pay off your debts? Now, big disclaimer, I am not telling you to go spend a lot of money on credit cards. In fact, I agree with a lot of what Dave teaches. I mean, the majority of it. I've gone through his education. I believe in it. My wife and I sat down, went through the education together. We are both in alignment with Dave Ramsey and 99% of what he teaches. So I'm a big fan there. But I will challenge you as an

entrepreneur. I will challenge you as a business owner to take a look in a different model. Now, here's the big win. By the way, again, if you're liking this video, make sure you smash that like button. Make sure you hit the subscribe button and check out my other videos. I drop a video a day. Make sure you're checking them out. All things business, real estate, and entrepreneurship. Now that I said my piece, let's move on to the big winning factor of 2021. What makes this even more important is the idea that now moving into 2021, there are going to be people that are going to be in tricky spots financially. And if you can help them out, there is a way to creatively finance these rental properties that I'm talking about, where you don't even need to come out of pocket that $50,000 that I gave you as an example. And you can do some creative financing with the

homeowner, come out of pocket, literally nothing, and start making hundreds of dollars a month on rent. Now, this video isn't going to lay out that strategy for you. If you do want to talk about creative financing, real estate, flipping, buying and hold, go check out my website, thescienceofflipping.com. A ton of free resources for you there, thescienceofflipping.com. Ton of free resources for you there, thescienceofflipping.com. But in 2021, there is going to be a lot of waves that get caused because of this entire pandemic, because there will be landlords that aren't collecting rents from tenants, because there will be homeowners that won't be able to pay their bills and their mortgage. There will be a ton of opportunity for the normal Joe to get into the real estate

space, creatively finance deals by taking over loans from the homeowner, being able to pay the mortgage, create a rental property for yourself, and start collecting that income with no money out of pocket. I know because I've been doing this for 13 years. This is a total game changer going into 2021, and this is why I'm shooting this video. As much as I love my boy Dave Ramsey and everything that he is teaching, and as much as I've gone through all of his education

because I firmly believe in not spending every dollar you have and racking up credit card debt and getting a bunch of loans. I will tell you this. I challenge the idea of quickly, rapidly paying off all your debt you possibly have so you can live debt free. I don't 100% agree with that because I do believe there's a way that if you are smart, you have good creative ideas and you take advantage of a great economy and create more revenue, create more income, that is the income that you can put towards paying off your debt and you continue to have the income you currently have. So you're paying your bills, you're living the lifestyle you always have

and you're sacrificing nothing because you have more revenue coming in, hopefully from rental properties, and even more hopefully from creative finance deals that took none of your own money out of your pocket. And you can take that money and put it right towards your debt. Again, if you like this, please smash the like button, hit the subscribe button. I drop a video every single day. Make sure to check them out. Go watch my other previous videos.

I talk all things business, real estate, and entrepreneurship. I hope I see you guys soon. Peace. Thank you.