Get out of debt

There are several options for getting out of debt. One popular option is to payoff the largest balances first, another is to payoff the highest interest rate first. While both of these are good options, they do not give a sense of accomplishment very quickly like the next option I will show you. This is from The Total Money Makeover by Dave Ramsey.

The "Debt Snowball"

1. Lists your debts in order with the smallest payoff or balace first.


2. If you have two debts with similar payoffs, list the higher interest-rate debt first.


3. Pay off the smallest balance first. Anytime you get some extra money, put it toward paying off your debt rather than acquiring more stuff to clean, stow, and eventually give away. Meanwhile, be sure to make your [minimum] monthly payments on all your debt.


4. Once you've paid off the first debt, apply the entire monthly payment that you used to pay toward the first debt toward the second debt on the list. (You will be paying out the same amount of money each month, but you will be paying down this debt twice as fast.)


5. When you've paid off the second item, apply the entire amount you were paying on debt number 1 and debt number 2 toward debt number 3.


6. Continue until you have paid off all consumer debt.

This option can allow you to focus your money to eliminate the debt quickly. It is very important to stop using the cards when you begin this and remember, once you payoff that card, put it away and don't use it anymore. It's understandable to have a credit card for medical expenses and emergencies, but a huge sale at your favorite department store is not an emergency! Then, you can easily save and pay cash for things that you want rather than charging them and them being no longer useful by the time you have finished paying for them. My prayers are with you that you live within your means and your soul will prosper along with your pocketbook!