Let’s discuss, first, what the debt snowball is. The idea behind the debt snowball is simple. Begin by listing each of your debts on one piece of paper. List your largest debt first and keep going until you’ve worked your way to your smallest debt. Some families post their list on their fridge or on their desk so that they see it regularly. I’ve known other people who keep it in their wallet so that they think about it every time they consider making a purchase.

Once you’ve listed all of your debts, you’re ready to start your debt snow ball rolling. Each month you gather as much money as you can to put toward paying off your debts. You pay the minimum payment on all of your debts and then put everything else you can scrape together towards the smallest of your debts.

As soon as you pay off that smallest debt, you should draw a big line through that entry on your debt list. Then, take the money that you are no longer sending to that vendor and send it to your smallest remaining debt. You continue on this path until all of your debts are paid off. During this time you also add any unexpected windfalls to your debt payments.

Sounds easy, doesn’t it? That’s why the debt snowball works for so many people. It’s not complicated; anyone can do it. It’s a simple plan that helps you work your way out of debt.

Getting back to your question about whether or not the debt snowball will work for you, I have to answer a confident, “Yes!” I believe the debt snowball can work for anyone. Besides being easy, this plan is designed to keep you motivated. People get so excited as they move closer to crossing their next debt off on the list that they find the will to continue making sacrifices for their goal. Some even start selling things or working extra hours to speed their progress.

Content provided by Not Made Of Money: Debt Snowball – How a Simple Plan Can Help You Get Out of Debt

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Put yourself on an allowance.
Do you remember the days when you were a kid and you were given a weekly allowance by your parents? Back then you were probably extremely skilled at stretching that allowance to get the most out of it. Why not revisit those times? Determine a reasonable amount for you to spend during the week (not counting fixed expenses like rent or your car payment) and put that amount in your purse or wallet. Whatever happens over the next week, don’t increase that amount. Before long you’ll be an expert at getting the most out of your allowance again.

Remind yourself why you are cutting expenses.
Are you saving for a down payment on your first house? Maybe you are saving for your wedding expenses. Whatever the inspiration for your desire to spend less, that inspiration can help you stay on the path to reduced spending. Try carrying a reminder of your goal with you. You could carry a picture of your dream house or a sample wedding with you wherever you go. Then, each time you open your wallet to purchase something, you’ll be reminded about your goal. Is the item your about to purchase worth delaying you goal?

Start running (or walking).
The point here isn’t just to get from Point A to Point B. If you are exercising regularly, you’re spending part of your day doing something that doesn’t bring any temptation to spend money with it. Instead of walking around a department store, put on your sneakers and walk at your local park. You’ll save money and get in shape at the same time. I think the important point here to focus on is to avoid the temptation of spending.

Volunteer at your favorite charity.
Like the exercise option, part of the reasoning behind suggesting that you volunteer is using your time in a way that doesn’t encourage you to spend money. However, there is an added benefit to volunteering. When you are surrounded by people who are less fortunate than you are, you may find that the new pair of shoes you’ve been coveting doesn’t seem quite as important as it did yesterday. Remember how lucky you really are.

Have an exchange party.
If you just have to have something new, but you know it isn’t in this month’s budget, host an exchange party for you and your friends. Everyone should bring something from their home that they no longer want. Select something that is nice, but you’re not in love with. Maybe, you received a beautiful vase from your boss for Christmas. Although you are touched that your boss cared enough to get you a gift, it’s excessively modern style doesn’t really match the shabby chic décor in your home. This type of item would be perfect for the exchange party.
Choose a method of switching objects. Try to pick something that you and your friends will enjoy like playing games with the objects as prizes. The only rule is that no one goes home with the object they came with. By the end of the night, everyone will have had a good time and will have something new. And no one spent a dime.

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If you find yourself getting stalled out each time you decide to tackle your debt, take heart. You’re not alone. It’s easy to get overwhelmed by the size of your debt and to just assume that you’re never going to be able to get out from under it. The key to reducing your debt is to create a plan and start working it. To that end, I’ve put together a few steps to get you rolling:

To reduce debt you need to start by creating a budget

Before you can cut debt from your life you have to be in charge of your money. You have to know how much you have each month and where you’re going to spend it. Start this month by writing down your income and listing every payment you will make this month. Don’t forget to budget an amount for flexible costs like food. Next month, you can revisit your budget to “fix” any oversights you experience this month.

Put extra money you have towards reducing your debt

Now that you have your budget in hand, you know exactly how much money you have to send to your debtors. Of course, you already budgeted for your minimum payments, but you should also have a budget item that shows your extra debt payment. Send that entire amount to one debt to maximize your impact on that debt.

Track your progress as you eliminate debt

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You should begin by listing all of your debts in one place. This list will become the measuring stick for your debt reduction progress. Cross off each debt as you pay it off. This list will motivate you to continue the trek towards paying off debt.

Inspire yourself to stay on track with your debt reduction goals

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If your debts are too large to see quick progress, I would suggest using other tools to help you stay driven. For instance, one family we know did a little “Jeep” thermometer when they were paying off their car. They drew a Jeep figure and marked sections off for every $500 they owed on it. Then, as they made payments, they colored in the sections. By the time the entire thing was colored in, their car was paid off.

Stop incurring more debt

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The most important key to reduce your debt is to stop creating it. Now, as you send all of your extra money to debt payments, you may find yourself tempted to use your credit card when small emergencies pop up. I would suggest, instead, that you build a small emergency fund before you start working off your debt. $1,000 should be enough to cover most problems. You can always pad that account after you get rid of your debt. Most experts advise an emergency fund that will cover 6 months of living expenses. However, each situation is unique and you need to plan for what is best in your situation.

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To desire to Become debt free is an admirable goal, but it’s pretty intimidating, too. If you’re facing a mountain of debt, you may not even know where to start. Should you save up enough money to make large, extra payments? Maybe you should send a little extra money to each of your debtors. The questions you have may cause you to hesitate when you should be getting started.

If this sounds familiar to you, try these strategies to start yourself on the track to becoming debt free:

Make A List Of All Your Debt

One of the most fear-inspiring aspects of debt is the unknown information. By listing each of your debts in one place and facing them, you can conquer your fear of the unknown. You’ll know exactly how much you owe and who you owe it to. In addition, you’ll be able to console yourself with the knowledge that this is the worst your debt will ever be because you’re going to become debt free.

Commit to paying a specific amount towards your debt each month

Look at your budget (and create one if you don’t have one) and decide how much you can send to your debtors each month and do it. Don’t be tempted to short that payment one month because you want to do something else with the money. Stay strong and keep plugging away at your debt.

Reward yourself for progress towards your debt free goal

Now, I’m not talking about taking a vacation you can’t afford when you pay off the credit card bills from your last vacation. However, if you’ve struggled for six months to pay off your Visa card, you should recognize your progress with a little reward. Take the kids to a movie (matinee, of course) or treat yourself to a new pair of shoes (from a discount store). Everyone likes to be rewarded for their hard work; just make sure that your reward doesn’t wreak havoc on your progress.

With some careful planning and an eye towards your goal, it is possible for you to become debt free.

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Unfortunately, there is no easy solution to trimming high interest credit card debt out of your life. Once you’ve accumulated a mountain of debt, you will find that it can take quite a while to pay it off. There are, however, a few ways you can minimize the interest on your debt. Each dollar that you save on interest is one more dollar you can dedicate to eradicating your debt.

Transfer your credit card debt to a new card. Many cards offer promotional low-interest balance transfers. If you have a credit card that is charging you high interest, you may benefit from a balance transfer. Just be sure to understand when that promotional period is going to end and to have a plan for what you will do once the end arrives.

Pay your credit card debt down as quickly as possible. Since the interest you are charged is based upon your outstanding balance, paying your debt off will cause your interest charges to fall, too. If you make paying your debt down a priority, you will find that you can knock it out much more quickly than you think.

Take out a consolidation loan to lower your interest rate. For many years, homeowners have been tapping into the equity in their homes to pay off credit card debt. The interest rates associated with a mortgage or home equity loan are much lower than credit card rates and the interest charges are typically tax-deductible. Please note, though, that this should be a last resort. Risking your home to pay off unsecured debt can be a very slippery slope. You should also know that qualifying for these loans can be much harder in the wake of our nation’s credit crisis.

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