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Utilizing Debt Snowball Method to Manage Debt

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“Debt” is one of the worst financial crises that a human being can ever face. Statistics reveal that an Average American family carries a credit card debt worth $8,400 and over 40% of people actually spend more than they actually earn. If you are a victim of debt and wondering how to manage it, here is an effective way to come out of it or at least to tackle it.

The Debt Snowball method:

This method of debt repayment is mostly applied to revolving credits, better known as Credit Cards. Snowball method, spread by Dave Ramsey has helped people overcome one of their biggest financial crises of their lives. It is based on the concept that, paying off smallest debts first and then moving on to higher debt amounts will eventually lead to a faster recovery from debt. If you ask me, this has a psychological impact on the human mind. When the smaller amount gets paid off first, the person slowly starts to gain a confidence within him. He will feel the burden getting reduced slowly from his shoulders and sooner or later, he will see a ray of hope that may ultimately help him come out of the debt permanently.

Before we get into the debt management by snowball method, it is required that you understand and follow these key points given below:

Now, How Do I?

The Emergency fund:

Prior to starting this process, keep aside a healthy sum of around $1000 as a disaster fund. Now, this money is not for you to repay your debt; this money is kept aside so that you do not suffer a further loss in the event of a worse crisis in the future. This amount will prove as a life jacket and will keep you afloat over the ocean of bad debts.

List it:

The second step towards managing debt using Snowball method is to list down all your debts starting from the lowest debt to the highest sum to be paid off. You can even add details about the interest rates to your list. While majority of the people have a misconception that dealing with higher sum will help in a faster recovery, Ramsey believed that paying off smaller debts first will help you understand whether you are on track with your plans and will give rise to corrective actions.

It’s all about going the extra mile:

Once, you’ve listed your debts, zero-in on the one which you wish to repay first. Stop repaying the exact amount specified on your due and try paying with some extra sum. Repaying with an extra sum will enable faster settling of debts. Take up a secondary job, in case you can’t afford to pay extra or you can even make money by selling off your old unwanted materials and things which may be useful to others. But, the most important thing in this stage is “Self Control”. Even if you can’t make that extra money, be sure that you don’t spend extra. Spending will once again put you in that vicious cycle.

Witness the momentum getting restored:

As you settle your first debt, you will experience a strange confidence within you. You will now be able to face the remaining debts with courage. Now, begin the process again by repaying the next debt by with that extra money you have in your hand. Repeat this process, stay on track, and you will eventually come out of it, very sooner. So, never lose hope, try hard and live a debt free life.

This is a guest post by Jem Larson of, a site that offers savings and current information on FiOS, as well as services.

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