The Debt Snowball - An Easy Debt Payoff Method

Do you want a quick, simple way to pay off your debts? An easy method to rid yourself of debt is by using a debt snowball. I used this method to pay off over $20,000 in 2 years. A debt snowball is an efficient way to pay off your current debt in a certain order. The debt snowball organizes your debts to be paid off from lowest to highest balance, regardless of interest rate. This frees up money quickly to add to the next debt. Your money grows over time as you pay off smaller debts and rolls into a snowball.

Paying off your debt can be frustrating and overwhelming if you have more than one to pay off. Do you find yourself barely keeping up with minimum payments? Are you having trouble keeping track of what debt to pay and when? The debt snowball can help you in organizing and paying off these debts very easily. The method is pretty simple to use. Start by listing your debts is order of lowest to highest balance. After your list is complete write down the required minimum payment after each debt and add up the total. Next, go through your budget and decide how much extra money you have available each month to add to your debt repayment. This extra money is called your snowball. You will use your snowball on your lowest balance debt first. If there is no extra money the easiest thing to do is sell some belongings or have a yard sale until you get enough to pay off your first debt.

Heres how the snowball actually works. Pay the minimum payments on all your debts, then take your extra snowball money and apply it toward your lowest balance. Continue to do this each month until your first balance is paid off. Then you take all the money you were paying on your lowest balance, including the minimum payment, and apply this towards your next lowest balance. This is your new snowball. keep doing this until all your debts are paid.

Using the snowball in this manner lets you to get a couple of your smaller debts paid off, thus leaving you with a smaller amount of debts to keep track of. It also lets you have more money to put on the next debt and out of this comes the snowball effect. This method is highly effective. Some people have used a variation of this method by listing their debts in order of highest to lowest interest rate. Either way can help you get out of debt.

Erin Kurwicki is a wahm making money online to pay off her debts and achieve financial freedom. Her and her husband live in Southern Illinois and raise Whitetail Deer. Check our her blog http://moneymatters2007.blogspot.com for more financial tips and ways to earn money online.

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