Weekly Money Saver: Stuck In Debt? Snowball Your Payments
Stuck in debt? Finance pro Dave Ramsey is a fan of the “snowballing” technique, which can help those who need to overcome the debt mindset-hurdle by paying off debts in order of the balance amount (smallest first) as opposed to paying on the highest interest debts first. Why? “Personal finance is 20 percent head knowledge and 80 percent behavior. You need some quick wins in order to stay pumped enough to get out of debt completely,” says Ramsey.
So how do you do it? List your debts in order with the smallest payoff or balance. Continue to pay the minimum payments for all other debts and bills, but attack that one balance with all the money you can possibly throw at it each month. Once that’s paid off, use that same amount of money to start on the next smallest balance, on top of the minimum payment you’ve been paying. Continue “snowballing” your money until you’re debt-free!