If you spent any time in the snow as a kid, you may have learned that the best way to make a snowball is to take a clump of packed snow and start rolling it. Well, as it turns out, that’s the best way to pay off your debts as well. The debt snowball technique has become widely popular for one simple reason; it works.
If you’re struggling to pay off your debts, but aren’t ready to consider bankruptcy, your best bet is to try the debt snowball technique. If that doesn’t work, then you’ll know it’s time to talk with a bankruptcy attorney about other options.
How to Use the Debt Snowball Technique in 5 Steps
- Get current on your bills and regular expenses. You won’t be able to make any serious progress unless you are current. The key to the debt snowball trick is that you are working faster than your debts, which is impossible if you are also playing catch-up.
- Make a list of every debt you owe from smallest to biggest. Don’t worry about any other factors other than the principle amount owed. Forget about interest amounts, no matter how high.
- Start making minimum payments on all of those debts. It’s not going to work if you put one debt off in favor of another.
- Declare war on your smallest debt. Throw every last penny you have that isn’t going towards living expenses or minimum payments directly at that smallest debt.
- After the first debt is paid off, move on to the next. Put every dime that was going towards the first debt into paying off the next one. After that, move on to the next, and so on. Every time you pay off a debt, you should have more money available to throw at the next debt.
What If Debt Snowballing Doesn’t Work?
The debt snowball technique requires you to seriously cut back on your spending, to the point that you’re living on the bare minimum. You may even want to get a second job to help expedite the process. You have to attack your debt like a wild animal, like you can only see red. You should be dreaming about debt repayment. Using the debt snowball trick means you will have to make a lot of sacrifices, but when it’s all over it will be worth it.
Unfortunately, sometimes a debt is just too big to realistically pay off in any amount of time. In other cases, the level of sacrifice required can be unreasonable or impossible. If this technique doesn’t work, consider talking with a bankruptcy attorney about other solutions. Chapter 7 bankruptcy helps thousands of people say bye-bye to their debts in just a few short months.
Washington DC bankruptcy lawyer Kevin D. Judd has helped countless people find the best solutions to their financial problems and achieve their goals of becoming debt free.