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Debt Snowball Method
The debt snowball method is a tried and proven way to get out of debt fast and save the most while doing so. It is really a simple technique that creates a snowball like effect by starting small and gaining momentum as you go. There are two ways you can go about it, paying off the lowest debt first or the debt with the most interest first. Using the latter will save you more in the long run, but it is up to you which way you go.
HOW IT WORKS.
First you should save a little backup just in case you hit a bump down the road you can continue making your payments on time. About 2 months of all you minimum payments combined and the current bill you are working on.
Make a list of all your bills and depending on which method you chose place them in lowest amount owed first or highest interest first. Start paying all the minimum payments on all you debts except the first one on you list. Take all the money you have from paying only the minimum payments on the rest of your bills and any extra you can come up with every month and pay off the first bill. After the first debt is paid move on to the next one on your list. Add all the money you use to pay on the first bill to the minimum payment you are paying on this bill until it is paid off. Continue the process until all your debts are paid in full.
As you can see, it is like a snow ball rolling down a hill. The best part of the debt snowball is that you can see your progress as you finish paying of a debt. This will help to keep you motivated through out the entire process.
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Snowballing your debt or debt stacking is something I always preach to my friends and family. I’m glad to see another site out there that understands the concept and is willing to share it with the world! Keep up the good work and thanks for the post!
Thank you, Conrad. I believe this is information everyone should know. It’s a great way to pay off your debt fast.