Here Is A Method That Is Helping People Get Out Of Debt
Posted at by ifydcat on category FinanceIf you are drowning in debt and wish to get back to your life and become free again, here is a method you can use to get yourself out of debt. It’s not a quick solution, however when used effectively, it will get your debt repaid without borrowing more cash. It’s known as the “debt snowball” method popularized by Dave Ramsey. Basically, what you do is lineup all your debts and pay off the smallest balance first. When you pay that one off you begin the next lowest balance. The method works because of psychology. Once you’ve paid back one debt, you’ll feel like you have accomplished something and it will have a snowball effect. So here are the steps:
1. List all your debts with the smallest balance first.
2. Still pay the minimum payment on the other debts.
3. Now you find some extra money by reducing elsewhere and begin paying extra (above the minimum payment) toward the littlest balance or lowest apr debt.
4. Once you’ve paid off the first debt, you use the minimum payment from that debt towards the next lowest balance on your list.
5. One by one, you apply the minimum payments from the old debt toward the new debt and ultimately repay all of your debt.
For this to be effective, you will need some discipline. It’s tempting to wish to spend the excess cash on another thing rather than eliminating the debt. You should tell yourself that you’ve gone without that extra cash before so you’re able to do it again. Don’t try to put a lot of extra toward the first debt. You don’t want to strain your money too much or you may stop this method.
Finding yourself in debt is stressful. Getting out of debt is difficult. Mentally, you have to focus and keep in mind what an excellent stress-free feeling you will have when you’re finally free from debt. Try and set a goal, like a vacation you have always wanted to take. This will keep you motivated and focused throughout the program so you don’t quit. What you should do is begin using the money that used to go towards debt and start investing it wisely. Going back to your old habits will undoubtedly bring you back to the exact same situation.
Check out my awesome blog on debt management and investments at www.moneymanagementinfo.net. Also make sure to read my article on the 10 Rules For Financial Success.