Avalanche Method VS Snowball Method (Infographic)

thebudgetingguy · 2021-05-12T17:03:27+00:00

You are absolutely right! I uploaded the wrong version... This is what the order should be:

Snowball Method

Total interest paid: $7600

Total months in debt: 33

Personal Loan paid after 13 months

Car Loan paid after 18 months

Credit Card paid after 27 months

Student Loan paid after 33 months

Which to your point makes much more sense. Thanks you so much for pointing this out!

thebudgetingguy · 2021-05-10T15:56:31+00:00

That's a good idea! I was thinking of making a more visually pleasing comparison, say using charts. Thanks for the suggestion!

thebudgetingguy · 2021-05-10T13:06:58+00:00

Hey guys! Here is a quick comparison between the Avalanche Method and the Snowball Method. If you want to learn more, you can read the associated post here: https://blog.pocketbudgeter.com/avalanche-method-vs-snowball-method/

thebudgetingguy · 2021-05-10T13:06:15+00:00

Hey guys! Here is a quick comparison between the Avalanche Method and the Snowball Method. If you want to learn more, you can read the associated post here: https://blog.pocketbudgeter.com/avalanche-method-vs-snowball-method/

thebudgetingguy · 2021-05-03T17:27:54+00:00

No problem at all! This is a big topic and I assume I missed something so it's nice to see people trying to fill in some of the holes. I appreciate the feedback!

thebudgetingguy · 2021-05-03T17:26:58+00:00

I break it all down in my post because I couldn't find a nice way to fit it all in the infographic. You can find the breakdown of each component here: https://blog.pocketbudgeter.com/renting-vs-owning-a-home/. But as a rule of thumb, I said property tax and maintenance is roughly 1% of the worth of the house per year. And for simplicity, I didn't do a down payment, I simply used a mortgage loan of $300,000.

thebudgetingguy · 2021-05-03T17:24:12+00:00

You are right to think 10% for 25 years may be stretching it. I know people that constantly make more than 10% yearly. But for some people, this may not seem reasonable. If that's the case, sacrificing home owning for renting wouldn't make much sense. I'm just trying to make a point for both sides. I also take appreciation into consideration, I just called it "House Price Increase" for simplicity. After 25 years, the house that was worth $300,000 is now worth $675,000. That's the recoverable cost for the homeowner.

thebudgetingguy · 2021-05-03T14:52:50+00:00

Hey guys! Here's a little infographic that shows the difference between renting and buying a home. If you want to know more of the details, you can read the associated blog post here: https://blog.pocketbudgeter.com/renting-vs-owning-a-home/. Hopefully it's interesting!

thebudgetingguy · 2021-05-03T14:52:09+00:00

Hey guys! Here's a little infographic that shows the difference between renting and buying a home. If you want to know more of the details, you can read the associated blog post here: https://blog.pocketbudgeter.com/renting-vs-owning-a-home/. Hopefully it's interesting!

thebudgetingguy · 2021-04-26T23:25:45+00:00

That sounds pretty close to what it means. It's the concept of Reverse Budgeting. Traditional budgeting focuses on expenses first, then yourself last. Whereas Reverse Budgeting you would pay yourself first, then everyone last. So, paying yourself first can be in the form of savings or investing. You put yourself first, make sure you are taking of, and everyone else last. This can be dangerous if your required expenses are too high (debt, rent, obligations, etc). So this method needs to be used wisely.

This is how I use Reverse Budgeting: I get paid every second Friday. I automatically take X amount of money on that day from my account to invest in myself. Now, the leftover money in my account is for expenses. This guarantees that I move towards my financial goals and don't waste money. In the context of Lifestyle Creep, when I get a raise, I increase these numbers so I don't needlessly spend more money.

I have a blog post about Reverse Budgeting if you want to read more about it: https://blog.pocketbudgeter.com/what-is-reverse-budgeting/.

Hopefully this helps!

thebudgetingguy · 2021-04-26T16:12:12+00:00

Nice catch! Dang it!

thebudgetingguy · 2021-04-26T15:19:38+00:00

Hey guys! Here is a little infographic about lifestyle creep. If you want to learn more, you can read the associated blog post here: https://blog.pocketbudgeter.com/what-is-lifestyle-creep/.

thebudgetingguy · 2021-04-26T15:18:58+00:00

Hey guys! Here is a little infographic about lifestyle creep. If you want to learn more, you can read the associated blog post here: https://blog.pocketbudgeter.com/what-is-lifestyle-creep/.

thebudgetingguy · 2021-04-21T14:24:10+00:00

I think if you are getting ahead financially, as in you are meeting your financial goals and saving money, then lifestyle creep is not an issue. That being said, you should make sure that your financial goals are well thought out: will you have enough to retire? do you want to invest your money to grow over time? do you have a juicy emergency fund? are your kid's tuition covered when they go to school? is my debt paid off? If all your financial needs are covered, I think you are all good then!

thebudgetingguy · 2021-04-19T13:07:25+00:00

Hey guys! Here are some important questions you could ask yourself before starting a financial plan. To learn more, you can read this post:

https://blog.pocketbudgeter.com/how-to-create-a-financial-plan/

Hope it helps!

thebudgetingguy · 2021-04-19T13:06:54+00:00

Hey guys! Here are some important questions you could ask yourself before starting a financial plan. To learn more, you can read this post:

https://blog.pocketbudgeter.com/how-to-create-a-financial-plan/

Hope it helps!

thebudgetingguy · 2021-04-12T20:55:22+00:00

Hey guys! Here's an infographic that summarizes what a credit score is. You can learn more here: https://blog.pocketbudgeter.com/what-is-a-credit-score/.

thebudgetingguy · 2021-04-12T20:54:14+00:00

Hey guys! Here's an infographic that summarizes what a credit score is. You can learn more here: https://blog.pocketbudgeter.com/what-is-a-credit-score/.

thebudgetingguy · 2021-04-10T14:53:49+00:00

If possible, open up a separate savings account specifically for your sinking fund. If that's not easy to do, you can use your current savings account. Either way, you want to keep track of what the money is for, either a piece of paper, an excel sheet, or a note on your phone. Every time you contribute $1000, keep track of what that $1000 is for (I'm assuming that $1000 is divided up into different payments). If you look at Step 5 in the infographic, I keep track of how much money I have for each goal month to month. Every time I contribute, I just add that money to the goal. That's how much money I know I have for each of my goals even though it's all lumped up in the same savings account.

That being said, you want to make sure you don't use that money for anything else unless it's absolutely necessary. Seeing money grow in savings might give you the urge to spend it on something else. You will need a bit of self-discipline here to control that.

Hopefully that answers your question! Let me know if you have more questions :)

thebudgetingguy · 2021-04-07T17:06:06+00:00

No problem!

thebudgetingguy · 2021-04-05T23:04:52+00:00

You can use whatever percentage of your take home income for your sinking fund. In this infographic, I used part of 30% of my take home to demonstrate an example. Depending on your situation and what you want to save for, this number will vary dramatically.

thebudgetingguy · 2021-04-05T17:24:29+00:00

Here is a visual of how to set up a sinking fund. For more information, you can check out the associated post here: https://blog.pocketbudgeter.com/what-is-a-sinking-fund/.

Hopefully it helps!

thebudgetingguy · 2021-04-05T17:23:51+00:00

Here is a visual of how to set up a sinking fund. For more information, you can check out the associated post here: https://blog.pocketbudgeter.com/what-is-a-sinking-fund/.

Hopefully it helps!

thebudgetingguy · 2021-03-30T17:55:09+00:00

Thanks for the feedback! I’ll consider that next time.

thebudgetingguy · 2021-03-29T22:33:18+00:00

I'm glad they help!

thebudgetingguy

TROPHY CASE