Using the Debt Snowball strategy to eliminate multiple credit card debts


The rather unusually named ‘debt snowball’ strategy is a method many credit counselling agencies espouse as a means to help reduce your overall debt burden over an extended period of time. This stratagem is not all that difficult to master one you are able to understand it completely.

Essentially, how the system works is that if you have more than one credit card debt, you are required to pay off the smallest debts first while making only minimum payments of the larger debts regardless of how large they are.

Once the smallest debts have been completely eliminated, you may than move on to the next smaller one while following the same concept of paying more for the smaller debts and keeping away ever impending solvency by making minimum payments of the larger debts, overall.

Slowly and gradually, as all your smaller debts are eliminated one by one, you may then increase the payment amounts of your larger debts rather than continue to pay the minimum amounts you were making before to your credit card service providers. Eventually, your larger credit card debts would also be paid and you would be finally able to live a debt free life once again.

How it works

The ‘Debt Snowball’ method aims to get rid of smaller debts first even if they are charging low interest rates and encourages you to make only minimum payments of even high interest loans regardless of how much higher they may be.

According to this strategy, the money that you earn every month will be utilized to pay off the smallest debts first (however, you have to make sure that it does not affect your basic living expenses since then you would be forced to take even more loans effectively exacerbating the vicious cycle) while the minimum dues on your other loans are paid irrespective of the fact that their interest rates are steadily increasing and you may in essence have to end up paying ‘interest on interest.

However, if you have two or more credit card loans whose payables are roughly equal, then many credit counselling agencies advise paying off the one whose interest rates are higher.

There are some key factors to take into ‘account’ (pun intended) while attempting to create the proverbial ‘Debt Snowball’

1.      Stop spending beyond your means!

This is the most basic step of all. You can’t really expect to live a debt free life if you continue to use your credit cards to spend money that you don’t have, while being well aware of the fact that this is the single most important factor that is responsible for putting you in debt in the first place!

2.      Be Myopic

Most credit counselling companies that use the debt snowball approach also advise you to acquire ‘tunnel vision’ instead of trying to pay off all your bills simultaneously. When it comes to credit card bills, focus on only one bill at a time and start on another one only after the first one has been completely paid off.

3.      Don’t stop at the very first pay off

Once a bill has been paid off successfully, rather than using the money freed to buy non essentials, it is advisable to continue to utilise that sum to pay off the next bill. This process has to continue without a break till ‘all’ your debts have been paid off and you can now enjoy a completely debt free life.






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