by GuestAuthor on August 5, 2010
If you’re struggling with credit card debt, you may grab hold of the Debt Snowball Method to help find your way out of it. What you need is the patience, determination, and planning to follow the steps in the Snowball Method and make it work in your favor.
Steps to snowball your debt
1. List your debts – List your debts from the smallest balance to the largest balance without taking into account the interest rate on them. If you find two debts have similar balances, consider the one with the highest interest rate first. (I know there will be people that scream that the highest interest rate should always be paid down first…but money is emotional, so trust me – you’ll have a better chance doing it this way!)
2. List the monthly payment on your debt – Note down the minimum monthly payments on each of your debts you need to pay.
3. Pay off your smallest debt – Try to make extra payments toward your smallest debt so to pay it off as quickly as possible.
4. Make minimum payments on all the others - Make a budget so that you are able to pay the minimum payments on each of your debts except the smallest debt as described above (pay as much as you can on it).
5. Direct funds to the next smallest debt – After you have completely paid off the smallest debt, use the money that USED TO be used to pay this debt, and direct all of it to the next smallest outstanding debt. THIS IS KEY! All of this extra money (from the smallest debt that you no longer have to pay) goes straight to principal, which is the key to the system.
6. Continue this process – Repeat this process until you have gradually paid off all your debts.
Advantages of The Debt Snowball Method
Here are some advantages you may find when you use the Debt Snowball Method to get out of debt.
1. Quick wins – It helps you to get psychological satisfaction when you find out that you are able to eliminate certain debts. This also helps you gain a positive attitude when you see fewer bills coming every month.
2. Provides motivation – The Debt Snowball Method motivates you to think about your financial situation seriously. It also helps you to stick to the plan until you eliminate all your debts.
3. Systematic way – The Debt Snowball Method helps you to pay off your debts in a systematic way so that you don’t stray from the system and think emotionally – you just work the system.
The Debt Snowball Method isn’t the best choice for somebody who is struggling to pay their debts each month. Consider credit counseling or debt settlement (or even bankruptcy) in that case.
The bottom line is that the Debt Snowball Method is recommended by many finance experts to get you out of debt as soon as possible, and give as little interest to the banks and credit card companies as possible!
Jason Holmes is a regular writer with Debt Consolidation Care and is also a contributory writer with other financial sites. His expertise is woven around various aspects of the debt industry and with his e-books he tries to impart to people the different situations and simple solutions to get out of difficult situations. Some of his works include e-books like ‘Credit Score The Quintessential Therapy for a Happy Pocket’, Take Creditors and Collection Agencies to Small Claims Court’ and, My Story- From Depression To a Smile’.
by Scott on February 17, 2009
Just a quick note with some good news for financially strapped homeowners, for a change–
In the recent past, your lender wouldn’t talk to you about modifying the terms of your mortgage if you lost your job, or otherwise got to a place where making your mortgage payments was impossible, until you had already missed at least two, and usually three, payments.
By that time your credit was already shot, you had racked up heavy late fees and penalties, and you were probably in a hole too deep to get out of. [click to continue…]
by Scott on February 14, 2009
So as I mentioned in my loooonnnnggg “What To Worry About Now” series, we had lots of people in a panic about many different things. That’s why I wrote those, and a few people really liked them and took some of the specific actions I suggested.
But a bunch of the people I see offline told me that I went off on too many tangents, and I generally just went off too much… We’ve been told that we are at our best when talking about how to get out of debt faster and related subjects, so I’ll stick closer to those. Sorry!
So let’s get right back into it. [click to continue…]
by Scott on February 10, 2009
Let’s face it. A bunch of us are just trying to keep our heads above water in this economy. Savings and retirement planning aren’t exactly the top news stories right now.
So where does that leave you when your bank fails or your safe money market fund “breaks the buck”?
Scared. Very, very scared.
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by Scott on February 6, 2009
Geez, it is depressing out there right now. It seems like just about everybody we talk to is really worried about losing their job. And…I’d say that almost half of the business owners are wondering if they’ll be able to make it until the economy turns around.
Scary for sure.
Remember at the beginning of this series of articles that I said that certain things you should worry about, and certain things you shouldn’t? [click to continue…]
by Scott on February 4, 2009
Quick but important one today…
We’ll get the random question about insurance here and there, but for the most part nobody thinks about it very much.
I’ve got to admit, other than briefly checking my coverage amounts on my home each year during renewal time, I don’t think much about it either. (Side note – if you haven’t ever thought about it, ask your insurance agent. He or she will be able to make sure you are okay, discuss “extended or guaranteed replacement cost”, and other important options with you). But I digress.
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by Scott on February 1, 2009
My HELOC is Freezing…
I really didn’t want to go back to discussing homes and mortgages and the housing market – how depressing. But, this has come up over and over, so I wanted to address it.
We started to hear from stressed-out people in our circles over a year ago that their HELOCs were being frozen (yes, in almost all instances the lender is allowed to do that). Even before things really got crummy, lenders were worried about their exposure due to plummeting home values. [click to continue…]
by Scott on January 28, 2009
The first two posts in this series were about home and mortgage problems. I think you’d agree that the problems there are the biggest nightmare right now. Even if none of those problems impacted you, I bet you know somebody that has been hit hard – I know quite a few personally.
But, I’d also wager that you know even more people that have been bitten by the credit card companies lately. You could spend days listening to people rant on this, and there are too many different topics to count.
But, this seems to be the toughest issue for people to find information about, so I’ll take a stab at it… [click to continue…]
by Scott on January 25, 2009
If you are in the process of selling your home because you can’t make your mortgage payments anymore, see the initial post in this series for more info.
We all know that this is a huge hot button in our country right now. Things are changing daily, and there is a bunch of solid, reputable information out on the Internet that can help – I won’t waste your time restating that. I’m just going to quickly bring up a couple things that most people we’ve talked to haven’t been aware of.
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by Scott on January 22, 2009
We’ve been receiving lots of calls and emails from people in a panic about their finances.
“How do I manage my huge credit card debt?”
“The house next door sold for $200K less than I paid for mine!”
“Should I even bother saving? My bank will probably go under anyway!”
“What about my pension/Social Security?”
Sure, you’d have to be living under a rock not to be at least a little scared about our world right now. But as usual in life, there are things you should worry about (those you can do something about), and things you should ignore – why bother if you can’t change them?
So let’s cut through all the noise and doom-and-gloom to talk about what you should be worried about – or not – TODAY. [click to continue…]
