How to Use the Snowball Method to Get Out of Debt Quickly
Many Americans owe so much money that they have no idea how they’ll manage to pay it off, and Christmas just made it worse. Even though the bills haven’t come rolling in yet, a survey from T. Rowe Price speculated that average spending this year would be $422 per child. (Which means half of Americans intended to spend more than that.) Because many Americans have little cash to spare, it’s a safe bet that these Christmas gifts were directly added to credit card debt.
Sometimes we get into debt due to bad decisions and sometimes it’s out of desperation. If you have ever been without money for groceries or utilities, you may have used a credit card even though you knew it wasn’t a good idea. Maybe you had a great income when you incurred the debt but then lost your job. There are many reasons you could find yourself way over your head. That’s all in the past. Don’t beat yourself up, because that’s ultimately counterproductive. Just commit to getting out of debt as quickly as you can and do you best to avoid the same pitfall in the future.
Financial expert Dave Ramsey recommends something called “the Snowball Method” for repaying debt quickly. Imagine a snowball at the top of a hill. As you roll the snowball, you pick up more snow, and the snowball gets bigger. By the time it’s at the bottom of the hill, it’s huge. You can do the same thing with debt!
Instead of flailing away with minimum payments and a little extra when you can, make a concrete plan to take down debt as fast as possible. Here’s how to get your debt paid off quickly…and remember, once it’s paid off, get rid of your credit cards so you don’t find yourself in this position again.