How to Get Rid of Your Debt Forever (Using the Snowball Method)
Let’s face it. Debt sucks! If you carry high balances on credit cards, you know exactly what I’m talking about. Paying out all that money every month to high payments that are mostly covering interest just makes you feel like you will never get out of debt. But you CAN get out of debt! I once used the snowball method to pay off over $60,000 in debt. You can too!
The Snowball Method
The Snowball Method helps you get out of debt much faster than if you just paid the minimum each month. The way it works is you accelerate your payments by putting extra money toward your debt with the smallest balance first. Once you pay off that debt, you start working on the next smallest debt.
The kind of debt this works for is credit card debt, car loans, consumer loans, etc. But for paying off your mortgage early, you would use a different method which I will cover in a later post on MommaMoneySense.com. For now, let’s try to get your credit cards and loans paid off quickly.
There are 4 easy steps to the Snowball Method
- List out all your debts on the Debt Snapshot Worksheet. List all your debts from smallest to largest balance.
- Determine how much extra you can put towards your debt. If you have a lot of debt, like $20,000 or more, then you should try to pay an extra $500 per month if possible. But if this isn’t in your budget, then do what you can. (If you are living paycheck to paycheck then you will need to make some changes before you can pay down your debt. Start with the basics of making a budget and cutting back expenses before tackling your debt.)
- Fill out the Debt Snowball Worksheet. Put your extra payment amount in and calculate how soon you will pay off your first debt. Then continue with each one after that.
- Start making payments for quick progress. Pay just the minimum payment on all the debts except the smallest. Pay the extra amount on the smallest debt. When that one is paid off, you take all the money you were paying on it and put it towards the next smallest debt. Once you pay off the first debt, you will be so excited about your progress that you will easily continue to stick with the Snowball Method.
You Could Be Debt Free
The average household in America owes over $16,000 in credit card debt. This can be paralyzing. Debt keeps you from having the flexibility to do the things you want and to enjoy your life. If you have a debt problem and you lose a job or have unexpected medical bills, things could quickly spiral out of control. If you have credit card debt, I challenge you to use the Snowball Method and get your financial freedom back. Download the Snowball Method sheets below.