Debt is one of the most common problems for us people. We all have to deal with debt, and if we are unable to control it properly, our financial status will be devastated in no time. There are a lot of reasons why people starts to build great debts, and there are also several ways on how you can deal with it. This article will show you a very simple way on how you can eliminate debt.
Debt Snowball is a newly introduced way of managing debt, and is often times contradicting what financial advisors are teaching. This process will help you talk about your credits without actually damaging your credit standing. We always hear advisors saying that we should focus more on debts with higher interest rates, and paying the one with the least interest rate last. However, most of these debts with high interest rates are also the one with the highest amount that is needed to be paid. So, no matter how much money we pay these debts it makes us feel that it does not change its amount.
This problem is also accompanied by another problem; the minimal payment of the lower interest rates. Once we focus all our money on paying the high rates, we forget about the lower debts, making it a lot bigger over time due to the interest. This is the basic strategy of the Debt Snowball that was created by Dave Ramsay.
According to Dave, when you are dealing with great debt, the first thing that you need to do is to pay the bills with the lowest amount. Minimize your payments for the bills with the highest amount, and focus all the money that you have in paying the smallest bills first. Once you started clearing up these small bills, you will start to get more money that can be used in order to pay the bigger debts easily.
This is the exact opposite of what most financial advisors are stating, but if we look at this method deeper, paying the lower debts first is more logical and practical. So, if you are having troubles even after you have followed what the traditional financial advisors have told you; try using the Debt Snowball method. This method will help you clear your debt one by one until you are totally debt-free!
