Things You'll Need:
- paper or notebook
- safe place to keep all your credit bills
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Step 1
Sit down and write down all of your debts: credit cards, car loans, student loans, personal loans, etc. Write down how much you owe on each bill next to each of your debts. Write down your minimum or monthly payment of each bill next to each of your debts.
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Step 2
On another piece of paper write down your monthly income (and partner's monthly income if it applies). Minus all of your monthly costs variable, and fixed, excluding your loans and debt payments, and any amount you put in savings, as these will be calculated in later steps.
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Step 3
Look at all of your loans and debts you wrote down on the other paper and look for the one you owe the most on. Take note of it, as this will be the loan you "snowball" first.
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Step 4
Now, out of the total you got from step 2, minus all of your minimum loan payments except the biggest one you took note of in step 3. The total you are left with is what you will have each month to put toward your monthly payment on this loan, and your savings. Try to put at least $50.00 a month into savings. If you can't, do what you can, as every little bit helps.
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Step 5
Now, in a few months, you will have paid off your biggest debt, while still paying minimum payments on the other debts and putting money aside in savings so you don't have to USE your credit cards anymore.
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Step 6
Once your biggest debt is paid off, you will add the amount you were paying on your biggest debt to the minimum payment you were making on the next biggest debt, and you will pay that one off even faster than the previous one. So on and so forth which each next biggest debt.
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Step 7
This process of "snowballing" will continue until you have paid off all of your debts. By the end, you will have no debts, and will have a decent amount in your savings account so that you will not have to buy anything on credit ever again.
Comments
tjzerrer said
on 7/9/2009 This is a good strategy. Thanks for the information.