Get Out Of Debt With “Debt Snowball”?

by Steven on January 5, 2012

Getting out of debt is probably one of the biggest mountains to climb because it requires several behavior changes in your life to do it successfully.

The number one reason why most people don’t get started on getting out of debt is they are too afraid to see exactly what they owe. The anxiety of learning just how much of a hole you’ve dug for yourself can bring a high level of anxiety. Because of that most people will not even get started.

Another reason why most people don’t get started is they don’t believe they will be able come up with the money to get out of debt. If you feel this way its because you are only looking at the problem not a solution to your problem.

You also have to make a decision to get out of debt. When you make the decision and stick to it you’ll do the things that will be need to be done to get out of debt.

Over the years a very popular method for paying off debt is to use what’s called a “Debt Snowball”.

This is when you put a plan to pay off your debt from smallest to largest. Attacking the smallest debt and paying minimum payments to all the other remaining debts.

As you pay off the smallest debt instead of spending the extra money you apply that to the next smallest debt. As you pay off the smaller debt and start to apply the amounts to the next debt you’ll gain momentum and have more cash to pay off your high debt’s off faster because you’ll be paying a higher payment each month.

Here are the 7 Steps to getting your financial house in order…

1. Stabilizing your household situation – you’ll never be able to pay off any debt if you can’t ensure that you and your family has a roof over your head, food on the table, utilities paid and transportation to and from work.

2. Set-up a budget – you’ll never understand how to management your money unless you know to the dollar what’s coming in and what’s going out.

3. Put together a debt elimination plan – when you have a budget you can put together a strategy to pay off your debt faster because you see what’s in front of you.

4. Establish an emergency fund – this is very important because most people use a credit card for an emergency fund and that’s a problem. If you have cash on hand more than likely you’ll rarely have emergencies and if you do have one you won’t have to go into debt to take care of it. I recommend at least $500 to $1,000 accessible cash with no penalties if used. While getting out of debt.

5. Review for acceleration of your debt elimination plan – once you have the other steps on paper there are several options that will open up for settlement offers on credit cards, automobiles, payday loans, etc.

6. Action + Action + Belief + Concentration = Tremendous Results – nothing will happen without you taking definite action with belief you can accomplish your goals and a high level of concentration to keep you focused on your goals.

7. Start saving for life experiences…Fun, Retirement, Generational Wealth

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