Getting out of debt can feel like an uphill battle, but it can get much easier with a smart debt repayment plan. You do not have to be a professional in debt relief to dig yourself out of significant debt. Simple solutions are available.
The snowball debt relief method is proven to work if you have the dedication to see it through. If you are in deep debt, however, consider filing for bankruptcy for a clean slate instead. Learn more about the snowball method to choose the right path for you.
Start with the smallest debts
The snowball debt repayment method works like a ball of snow rolling downhill. A small ball picks up more snow as it rolls, building in size by the time it reaches the end of the hill. Similarly, the snowball debt relief method starts by focusing on your smallest debts first and then builds momentum as you go from debt to debt. It is a smart strategy if you have multiple debts, such as several credit cards plus a car loan.
Start by paying at least the minimum amounts on all your debts. Then, tack an extra $50-$100 onto your smallest debt. Once you eliminate this debt, take the money you would normally have used to pay off your smallest debt and add it to the second smallest debt. Do that until the debt is gone. Then, add what you were paying to the next debt and so on. Your "snowball" will build momentum from debt to debt until you are taking big chunks out of your largest debts.
Alterations to the snowball method
Debt experts agree that the snowball method is not the fastest or cheapest way to pay off significant debt. However, it is a tried-and-true strategy that can help you repay your debts in full over time.
Consider altering the standard snowball method to save time and money. For example, many people start with the debt with the highest interest rate first, rather than the smallest debt. Paying off high-interest debts first can save more money in the long run.