Things You'll Need:
- a plan
- some form of income (it does not matter how much)
- determination
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Step 1
List all of the debts that you owe - Make a list of all of your creditors. These include credit card companies, friends and relatives, department stores, etc. Organize this list according to the outstanding balance remaining, from smallest to largest. In this example, the smallest balance would be #1.
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Step 2
Get Current - The first thing you need to do, is get current on all of your bills. If you do not have the income to make the minimum payments on each debt, then you need to find a way to make more money. Get a part-time job bagging groceries at night, deliver pizzas on the weekend, offer to work overtime at work. Consider selling things on eBay. Children's clothes, science fiction books, and action figures are popular items that I have made good income from in the past.
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Step 3
Pay the minimum payments to all of your debts - Once you are current on all of your bills, continue to make the minimum payments and STAY current.
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Step 4
Make an extra payment - Instead of going out to dinner on Friday night stay at home and make your own hamburger. Take the $25 that you would have spent and immediately send it off to the smallest debt (the one listed in spot #1). Sign up for online bill pay with your bank and send the payment that same night. This is the key ingredient if you want to reduce your debt.
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Step 5
Continue sending the minimum payments and the extra payment until debt #1 is paid off. Congratulate yourself, but do not relax now. Now is when the fun begins!
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Step 6
Combine your extra payment and the minimum payment that you were paying to debt #1 and send that combined amount to debt #2. Please note that you should now be sending the minimum amount to debt #2 PLUS the combined amounts that you were sending to debt #1. Do not spend the extra money. This is how your debt snowball really gets moving.
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Step 7
Continue implementing your debt snowball - Intensity and focus is what is needed now. Continue finding ways to add extra payments to your snowball. Find $5 on the ground, send that to the debt you are currently attacking. Receive a refund for something you returned? Send that amount off immediately.
