What is the method of snowballing debt?

Mobile software and applications to help reduce debt

The Snowball Debt Pay and Debt Method is not mathematics as much as motivation. Developed by Dave Ramsey, a popular financial author and radio and TV personality, the Snowball Debt Plan requires first paying off your smallest debt, which will give you a quick contribution that will motivate you to pay off other, larger debts.

Before you begin

debt recovery

Before you can pay off your debts using this or any other method, you will need to get organized.

Collect reports for all your loans, including credit cards with balances and any other debts you have outstanding. Ramsey is not worried about paying off the mortgage in this plan, so do you include that debt on you.

Ignore interest rates when entering debt. You are only concerned about the current balance for each debt. If the two debits have identical balances, you can use the interest rate as your guide and give that debt a higher priority.

Now put $ 1000 in your emergency savings account. If you don’t have $ 1,000 now, save that amount before you start. Make minimum payments on your debts until you have this money set aside.

Here’s how a long beam works

Now it’s time to get started. Make a list of your debts from smallest to largest. The smallest should be at the top of the list. Keep making the minimum payments on all your debts except for this one, the one with the lowest balance at the top of the list.

Make more than the minimum payment on this one, even double the payment if you can manage it.

Repeat this process every month until that debt with the smallest balance is paid off. Now focus on the next debt on your list. Take the amount you paid on the first debt and put it on the second, using that plus the minimum amount for the second debt as your monthly payment amount.

You see where it’s going now. When the second debt is repaid, you will use those funds to pay off the third debt with the minimum payment of that debt.

Software and application software for long snow

Software and application software for long snow

It may help to use software or a mobile app to support your debt reduction efforts. Here are some suggestions using the Snowball debt method. These technical tools will not only sort your debts for you, but will also give you details of interest savings when you can expect to pay off loans and other debts and other sources that can help you be motivated to become debt free.

  • Win, Mac, Online software
  • iPhone and iPad Apps
  • Spreadsheets Reduction Debt
  • Android apps

For a detailed example of how one person used the Snowball debt method to get rid of debt, read Get Out of Debt With Debt Snowball.

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