Understanding how to get out of debt always seemed overwhelming and complicated until I read about the debt snowball in Dave Ramsey’s book, The Total Money Makeover.
The debt snowball method, created by financial expert Dave Ramsey, is a debt reduction strategy where you pay off debts from the smallest balance to largest, gaining momentum.
Make a List of All Your Debt
Open a spreadsheet on your computer and start listing out all of your debts (except for your mortgage) from smallest to largest balance.
1
Continue Making All Minimum Payment
Before you start tackling debt, remember that you have to maintain all of your existing minimum payments. We can’t rob Peter to pay Paul here.
2
Find Extra Cash
You’ll need to find any extra money to throw at your debt snowball. Now is the time to get creative and be scrappy.
3
Get Laser Focused
Put all of the extra cash towards your smallest debts first and knock them out as quickly as possible. When you kill one debt, snowball that dollar amount and apply it.
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