In The Total Money Makeover by Dave Ramsey, Dave introduces the debt snowball method to help you reduce your credit card debt.
He has proven it is an effective means of reducing your credit card debt in a short period of time.
Learn how the debt snowball works and how you can use it to get rid of your debt.
Let's start with an analogy.
As a snowball rolls down a mountain, it picks up momentum and grows larger as it roars down the mountain becoming an almost unstoppable force.
And then it picks up a few cartoon characters who get trapped in the snowball and they continue to roll until they reach the bottom.
This is how a debt snowball works, apart from the cartoon characters.
As you start attacking your debt, you pick up momentum, and your efforts grow and you can wipe out large chunks of debt in a short period of time.
The way it works is you start with the smallest balance card you have, regardless of the interest-rate.
You make minimum payments on all the other credit cards until this one is paid off.
Because it has the smallest balance, it will be the quickest one to pay off.
This will give you a feeling of accomplishment and you will see that you are actually getting somewhere with your hard work.
This will motivate you to continue your debt elimination plan and start attacking the next credit card with the smallest balance.
But this time, you add the money you were paying to the previous card which now has a zero balance and you add it to the payment on this new balance.
In just a few short months you'll find that this card has a zero balance and you can now move on to the next card until they are all paid off.
The biggest benefit of using the debt snowball as a way to eliminate your debt is that you can see results quickly.
You get a boost or pick me up if you will when you see a card with a zero balance.
This way you can stay on track and keep going until you are debt free.
You will pay more money in interest over the life of the debts.
But you are more likely to stick with this plan than other methods that have you paying the highest balance or highest APR card first.
Taking on extra work at your job or starting an online business can help you increase your income by a few hundred dollars a month to further multiply your debt elimination efforts.
When you want to reduce your credit card debt, there are few plans that are better than Dave's debt snowball method.