5 Steps to Eliminate Credit Card Debt Using a Debt Snowball

Too many Americans today find themselves desperately trying to eliminate credit card debt. Whether it’s due to job loss or rising expenses, people are turning to credit cards to provide for their families and maintain a comfortable lifestyle.

But the "dark side" to credit cards – that is, paying them off – often becomes overwhelming, a problem that is frequently solved by making minimum payments and letting balances grow – and grow, and grow.

If you find yourself in this situation, the time to act is now. As you’re probably aware, the interest rates on your credit cards mean that time equals money – the more time you take to pay off those debts, the higher your debt will climb.

If you take a laid-back approach to eliminating your credit card debt, thinking you’ll pay off what you can when you can, chances are, it’s going to take you a while. You need a decisive, proactive plan to get rid of that credit card debt as quickly as possible.

One currently popular method that you might want to consider is referred to as creating a “debt snowball.” This method differs from some others in the sense that it requires you to pay off your debt with the lowest balance first, rather than the debt with the highest interest rate. This will help you build momentum that will help you eliminate credit card debt entirely.

Follow these five basic steps to give the debt snowball method a try:

1. List your debts in order from the smallest balance to the largest. Do not consider terms or interest rates.

2. Determine minimum payments for each debt, and commit to paying those on time.

3. Calculate how much money you will have left over after making those minimum payments. Use all of these leftover funds to pay down the debt with the lowest balance. Continue making those payments on this lowest debt (minimum plus any extra) until that debt is eliminated.

4. Once that debt is taken care of, move to the debt with the next smallest balance. Use the minimum amount you were paying on the first, already eliminated debt, plus any extra funds, to eliminate the second debt.

5. Repeat until all your debts are eliminated.

Not only is this method to eliminate credit card deb effective, but it is also encouraging. As you see debts being paid in full one by one, you will be encouraged to continue the method and eliminate all of your debt.

Certainly, the debt snowball method is not for everyone, but it is a method that has worked for many others and just might help you eliminate your credit card debt. If you choose to follow this method, make sure you commit to it completely. Don’t cheat, don’t give up, and don’t become discouraged. Eliminate credit card debt, and get off to a fresh start down your road to financial freedom!

Katie Harris is a freelance writer for Alliance Credit Counseling, a non profit organization that focuses on helping individuals and families become financially secure through debt management courses, credit counseling and bankruptcy. Visit their website at www.KnowDebt.org.

There is more of the best credit card debt help on this website, including some basic help with credit cards.

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