If you have debt, odds are you want to ditch it. You can work to eliminate debt on your own using the snowball method. The snowball method is a debt-reduction strategy where you start by paying off debts starting with the smallest balances first, moving to the largest thereafter. Try this method for yourself by following the following steps:
- Build a list of your debts, ranking them from smallest to largest balance. If you have a mortgage, do not include it in this list.
- Make minimum monthly payments on each debt balance, excluding the first one, the smallest one. For your smallest debt balance (found at the top of your list), pay as much as you can per month. You may have to refer to your budget to determine how much cash you can reasonably put toward this balance.
- Once the balance of your smallest debt at the top of your list is paid off, take the additional cash you were putting toward this payment and use it toward the next-smallest balance (second from the top on your list). Continue to make minimum monthly payments on your remaining debts.
- Continue this process until your debts are paid and you are financially free!