The Debt Snowball - A Very Clear Debt Solution

Getting into debt can happen to the best of us. It is a very uncomfortable feeling to be in debt, because nobody likes to owe someone money. Especially when the debt is exceptionally large (say, in the thousands) people will start to freak out.

Freaking out is exactly what you should not do though. It will result in you making rash decisions, such as trying to settle your debt. This is not the answer you’re looking for. Not only is it dishonorable to try and swindle your way out of debt. settling debt also has a lot of bad consequences that they do not tell you about. Just heed my advice, and don’t go down that path.

Try instead to use the debt snowball to clear your debt. This easy to understand method is one of the fastest, cheapest and most honorable ways of getting out of debt.

There are some steps you need to take before snowballing your debt. First you need to list all your monthly income, monthly expenses and debts. Note that you only list your absolutely necessary expenses. This does not include a trip to an expensive restaurant or going clubbing with your mates.

Next you subtract all your expenses and minimum monthly debt payments from your income. Hopefully this will leave you with some extra money. This is your balance. Now, do not get too excited with your balance. You still cannot use this to go clubbing. I will explain what this balance is for in a minute.

Now it’s time to start tackling those debts. Look at you list of debts, and see which one is the smallest. We will go after this one first.

Every month you will add your balance to the monthly payment for this debt. You keep doing this until this debt is completely cleared. This will make sure you pay it off much faster. When it’s paid off, your balance grows, because you have one less payment to make each month.

So the following months you will add your new and improved balance to the monthly payment for the next smallest debt. You keep doing this until that one is cleared as well.

You simply repeat this cycle until all your debts are paid off in full. With every paid off debt, your balance grows and your momentum increases. Often this will cut the time you need to pay off all your debts in half, which means you pay less money on interest.

So if you have several debts, and you think the end is nowhere in sight, use the snowball method to pull yourself out of it.

One last side note: If you subtracted your debt payments and expenses from your income, and it turns out they exceed it, then you need to look into consolidating your debt.

In my humble opinion, the debt snowball is the way to go when you need to clear debt, but if you’re stubborn, then read my article on settling credit-card debt. That way at least you’ll have an idea of what you’re doing.