Use the debt snowball method with Profit First: list debts smallest to largest, pay minimums from Operating Expense, then roll each paid-off debt's payment into the next one. Your payments grow like a snowball as balances shrink.
How can the Profit First system help me pay off debt quicker? We recommend the snowball debt method. If you haven't heard about this, the concept is pretty simple. You lay out all your debts that you currently owe and you sort them by lowest remaining balance to highest balance. We are not paying attention to interest rate. All of these payments— usually debt has a minimum payment— I'm going to make that out of my operating expense account. As a normal form of my business. So once a month I'm making my minimum payments. Then as I pay off each debt balance, I'm going to take that minimum payment and roll it into the next one. And therefore the amount that I'm putting towards the debt that's at the top of the list gets bigger and bigger and bigger, kind of like a snowball as it rolls down a hill. I have done a very detailed video on this, including a walkthrough with a worksheet. Please check that out. But that's kind of the general idea of how we use that.
