Written by It is extremely easy to get into debt. You may feel that you are drowning in your debt with no way out. There is a strategy that can help you pay off your debts fast. It is called the debt snowball method. This is a proven method that will allow you to pay off debt quickly and efficiently. This is not an easy fix. You must be dedicated and determined to pay off your debt.
The debt snowball method is primarily aimed at credit card debt. Credit cards often come with high interest rates and can seem impossible to pay off. But, you will be able to pay off debt with this method. This method is based on the concept that you order your credit cards by their balances, from least to greatest, to decide which one to pay first.
Let’s say you have three credit cards. One has a balance of $2,000 with an interest rate of 9.9%, the next has an almost equal balance of $2,024 with an interest rate of 11.5% and the last one has a balance of $2,900 with an interest rate of 12%. The debt snowball method uses balances to determine which credit card you would pay first. Notice the two first credit cards have similar balances, but the card with the $2,024 balance has a higher interest rate than the one with the $2,000 balance. In this case, you would begin paying the card with the $2,024 balance first because the interest rate is higher which is costing you more money. If the balances are similar, you choose the card with the highest interest rate to pay first, but if there is a significant difference in balances, always start with the card with the lowest balance first, disregarding interest rates.
Take the card that you’ve decided to pay first and pay the minimum on that card plus an additional amount each month until that card is completely paid off. During this period you must be committed to making the minimum payments on your other credit cards. Once the first card is paid off you can move the the next card, applying the amount you were paying on the first card to your payment every month along with the minimum payment on the second card. Once the second card is paid off, you move to the third card and apply the same amount you were paying on the previous card to the third card along with the minimum payment and keep doing so each month until that card is paid off.
