One of the most important aspects of truly getting out of debt is to pay off all of your debt as quickly as possible.  It can be a monumental task depending upon how much debt you have.  It can also seem overwhelming if you have lots of different sources for that debt.

If you have credit card debt, student loans, personal loans, car payments or other non-mortgage debt, then the debt snowball will help you.  The debt snowball is a method of paying off debt in a manner that might not make sense to you, but it works!

The debt snowball is designed to show you immediate results in paying off your loans and debts.  One of the most frustrating parts of paying off debt that causes most people to give up is not seeing any real results.  Most people make the mistake of going after the biggest debt first.  This leads to frustration and helplessness when you don’t see the size of the debt decreasing.

The debt snowball works by putting your debts in order from smallest to largest balance.  You continue to pay the minimum balance on all debts, but put all of your extra and available resources to pay off the smallest debt in full as quickly as possible.

Now this is the tricky part that most people find themselves taking on more debt, not paying off that credit card debt they want to get rid of!

Since you have now paid off the smallest balance, you will go after the next balance.  However, you will now take the original payment and add the payment amount of the paid off debt to it.  Make sense?

If your credit card debt payment was $50 per month and it was the first one you just paid off, take that extra $50 you now have each month and add it to the next monthly payment.  So if your second lowest balance monthly payment is $75, you add the $50 to it for a monthly payment of $125 at a minimum.  This is the debt snowball at work!

You just keep a rolling balance of funds from the paid off debts and keep adding that extra money to the payment of the next debt.  You start off small to see results with the debt snowball and it “snowballs” into a larger and larger payment that will quickly kill any debt amount.

If you have a large student loan debt or credit card balance, this is extremely critical to pay attention to.  Often times if you are struggling to make the payments, if you try and call the company they might lower your interest rate.  It never hurts to check!  This will help you to make the debt snowball work even better by reducing the balance you have to pay.

There are lots of debt reduction tips that I have written about before that can also help you.  Debt elimination is the only way to truly achieve financial freedom to be able to make your dreams a reality and begin a debt free legacy for your family.