The debt relief snowball method is a clear debt solution, a way to systematically erase your debts once and for all. Yes, this is possible. You can get out of debt now. You can certainly do it, if you persevere, no matter how much you owe.
1. Take Stock Right Now
The first thing you need to do is to face reality, and accept that your debt is not going to magically disappear overnight. It has probably been increasing for many years, and it will certainly take months or years to completely pay everything off. Now is the time to forget about winning the lottery. If you truly want to get out of debt, then you have to develop an attitude of patience and determination.
You will also have to stop using your credit cards to reach this incredible debt solution. You final goal is complete freedom from debt. So take a few minutes to decide if you are willing to make this commitment to yourself and your family. Make the promise, and see yourself achieving your goal!
2. Time to Budget
You need to develop a workable budget of some kind. Create a debt chart so that you can easily see, at a glance, exactly how much you need to pay each month, and how much you have to spend. A spreadsheet works great for this. You will need enough to live on, to pay your essential bills, and to make the minimum monthly payments due on all your debts.
Look at ways to decrease your expenses and ways to increase your income. Try to cut out any recurring billings that are not strictly necessary, like gym memberships and magazine subscriptions — unless they are absolutely vital, or unless they are bringing in additional income in some way.
3. Plan to Save
You should also start to save, even if you can only put aside a dollar or two each week. The reason you need to save is so that if an emergency occurs, you will not borrow or use the money that you need for your regular monthly outlay.
Before you can operate the debt relief snowball, you should have a minimum savings of $500 for a single person or $1,000 for a couple or family.
It’s very important to have something put aside for true emergencies. This money is not for food or rent; you will have to cover those items in full from your income alone. But it will be available for unexpected setbacks — for example, to repair your car if you must have a car to drive to work.
4. The Debt Removal Snowball Method
Once you have your financial plan in place, then you can start the debt relief snowball. Make a list of all of your debts, large and small. Include everything — even that $5 that you borrowed from a friend last week, that they never expected you to repay.
Arrange the list in order of how much you owe, with the lowest balance first (the total debt, not the monthly payment). You should finish up with a list that starts maybe with the $5 you owe your friend and ends with your mortgage or your biggest loan.
Now you will take all the spare money that you have each month – the money that you were putting toward your savings before – and start to pay off those debts, beginning with the smallest.
Why It Works
Some people will advise you to always pay off your highest interest debts first. While this does make sense in theory, it doesn’t usually work in practice. Most people are just not motivated enough when they are merely saving a few pennies here and there. We are usually motivated by a sense of achievement, and we get that feeling of accomplishment whenever we can cross one debt off our list of creditors.
Imagine how you will feel finally repaying that $5 that you owe to your friend. Way, way better than if you put it toward one of your bigger debts. The effect of the debt relief snowball is to motivate you to keep paying off your debts by having you get that great feeling of achievement as often as possible in the beginning.
To maximize this great feeling, give yourself a treat whenever you pay off a debt. Don’t make it an expensive treat, of course. But do something that you really enjoy. And try to make getting out of debt a whole family experience.
If you are married or have a family, then the treat should be for all of you. It might be something as simple as renting a $1 movie and making popcorn at home. The time you all spend laughing at a funny movie, and enjoying each other’s company, can be a reward in its own right.
Celebrate Your Success
Once you experience the wonderful feeling of paying off your first few debts, you will never want to go back to worrying about the monthly bills.
This is a true debt buster method. And now you can see why it snowballs. You start the snowball process rolling when you pay off your first debt, and then it seems to go on rolling under its own momentum.
So use the debt removal snowball process to achieve the best kind of debt repair, the permanent kind of debt solution that you can continue to celebrate forever.
Thank you for the interesting read! Alright playtime is over and back to school work.