Debt Snowball – The Proven Way to End Credit Card Debt For Good

Is credit card debt overwhelming you? You’re not alone. According to creditcards.com, the average credit card debt in American households is $16,007. If they’re only making the minimum payments on those cards, there’s a good chance they’ll pay off their 30-year mortgage before they pay off their credit cards.

Here’s the good news. There is a proven technique to pay off your debt in considerably less time. Financial guru Dave Ramsey calls this the Debt Snowball, and here’s how it works.

First, stop using your credit cards. If you continue to accrue debt, the snowball will not work.

Next, pick the credit card with the lowest balance and focus on that one first. Pay as much as you can on that card, and make the minimum payment on all of your other credit cards until that one is paid off.

When the first card is paid in full, move to card with the next lowest balance. Take the money you were paying on the first card and add it to the minimum monthly payment on this next card.

Example:

You pay $100 on Card A – the credit card on which you owe the least amount of money.

You make the minimum payment of $15 on Card B, which has the second lowest balance.

When Card A gets paid off, take your $100 and apply it to card B, in addition to the $15 you’re already paying. Your new payment on Card B becomes $115.

When Card B is paid in full, apply that $115 to the card with the next lowest balance, in addition to your minimum monthly payment. In essence, it’s like building a huge snowball. You start with a handful of snow, and as you continue rolling it on the ground, you’re adding more snow to it to make a bigger snow ball. With your debt, you’re adding more money to your monthly payment with each card until your debt is completely gone and you’ve built a huge surplus.

This method really works. People with $100,000 or more in debt have followed this approach to become debt free in a matter of a few years. But, you have to be committed to the process.

It’s a little bit like losing weight. You start slow, and as you start meeting your goals, you add momentum. If you stop eating right and exercising the first time your clothes feel more comfortable, you’ll never make it to your ultimate weight loss goal. Just the same, if you stop adding money to your monthly payments when your budget gets some wiggle room, you’ll never finish paying off those big balances.

If you’re ready to be debt free, let it snow, let it snow, let it snow!