How to Easily Pay Off Debt Quickly Using The Debt Snowball Method.

Debt is the evil monster that lurks in our wallet and threatens our financial freedom. Almost everyone has some form of debt, with some more than others.

Credit cards, student loans, and car payments, they have become a part of our life that we don’t like but have embraced to be able to have things now. Paying for it later has become the norm in our society.

There are steps you can do to reduce and even eliminate these debts. Your house payment should not be in the mix anytime soon unless that is the only debt you have. A home mortgage is considered good debt because most homes appreciate, and the interest rate is usually low. Paying off debt takes discipline, but with a plan of action you can do this.

There are many methods you can use to pay off debt. To name a couple, there is the Debt Snowball Method and the Avalanche Method. Today we are going to look at the Debt Snowball Method to pay off debt.

What is the Debt Snowball Method to Pay Off Debt?

Simply put, the Debt Snowball Method of paying off debt is to work first on paying off your smallest debt, regardless of its interest rate. Once that is paid off, you start tackling what is the next smallest debt, and so on.

It is a natural tendency for us to go after the easiest task first. Starting with small goals that are easier to attain keeps us engaged and motivates us to do it and continue to do it.

This method is quite different than the Avalanche Method where you start by paying off the debt with the highest interest rate. That is for another article.

How to Use the Snowball Method

First thing is to make sure you have enough money to at least make minimum payments on all your debt.

Then list out all your debt and arrange them in order from the smallest amount to the largest amount. It doesn’t matter in this method what the interest rate is for each debt. The smallest debt is going to be your first target to eliminate.

Set a target amount that you can afford to pay toward this debt every month. If money is tight, look for spending that you can reduce to help fund this debt payoff. Taking lunch to work, making your own coffee, living with the clothes you have are all things you can do to save more toward your debt payoff goal. Not saying you need to completely cut out all of these but cut back as much as you can to save some money to pay off debt quicker.

Is the Snowball Method Right For You?

While it sometimes makes sense to use the Debt Avalanche Method to pay down debt with the highest interest rate first, take into account the psychology of paying off your smallest debt first with the Debt Snowball Method.

It us usually easier for us to start with the easiest (smallest) debt to pay off first. It keeps us motivated to start and finish paying off smaller debt then move onto the next.

Give the Debt Snowball Method a try and see if it works for you. See my article on How to Create a Successful Monthly Budget That is Achievable Now to see how you can set up a workable budget today.