10% of Americans owe more than $30,000 in credit card debt.-USA TODAY
If you have made a commitment to reduce your family’s debt and need a proven strategy, I’ve got a plan that just might work. My husband and I have used the debt snowball method to reduce our debt. (We married young and were having too much fun in our 20’s.) Little did I know, we were using the method before it received a sophisticated makeover and was named the Debt Snowball Method.
It’s no secret that I cannot function (not a joke) without a list. So, I have created a list for you that details how to implement the Debt Snowball Method in your own Family Financial Plans.
Debt Snowball Method:
1. List your debts in order from the smallest balance to the largest balance. Interest rates and terms should not be considered, paying off the smallest balance first creates momentum and results.
2. Determine the minimum payments for each debt and continue or make a commitment to begin paying those debts on time.
3. Decide how much extra money can be designated to paying down your debts. Use that extra money plus the minimum payment to pay down the debt with the lowest balance. Continue making payments on the lowest debt until that debt is eliminated.
4. Once that debt is taken care of, move to the debt with the next smallest balance. Use the amount (minimum payment + extra money) you were paying on the first (already) eliminated debt, plus the minimum payment on the second debt, to eliminate the second debt.
5. Repeat steps 1-4 until all your debts are eliminated. As always, I have an example of a Debt Snowball Template to assist you with your planning.
How to Find Extra Funds (snowflakes) to Contribute to Your Debt Snowball Method:
- Sell your gold-I found random pieces of gold jewelry around the house and received over $300 for jewelry I would never wear again.
- Cut unnecessary household expenses
- Sell your stuff (garage sale, online)
- Request lower rates on credit cards
- Reevaluate insurance premiums (home, auto)
Leave a comment. Tell me about any debt busting strategies that have worked for your family.