With the recent economic crisis, mortgage crisis, high gas prices and rising costs of basic living, many people are finding ways to get out of their overwhelming debts. There are a lot of people who try their options to get debt free but later give up and file for bankruptcy. You didn’t fall in debts overnight, so coming out of this mess is certainly going to take some time. But there are ways to get debt free within a span of three to five years. One needs to have a lot of discipline and determination by using the snowball method.

If you are using the snowball method, you will be able to quickly pay off the outstanding balances faster than you ever thought possible. Snowball method will allows you to use your total income as you want to, but if you want to speed up the process to become debt free, increase your income so that you can contribute a substantial portion towards paying off the existing debts.

Here are simple ways of using the snowball method and walk towards a debt free life:1) Gather all the bills, plan your budget for all expenses, and determine how much money you can possibly save in a month.2) Go through your latest statements from the creditors and make a note of the outstanding balance. Now, you need to decide the account that you will want to pay off first. Either you should choose the account with the highest annual percentage rate or the one with the lowest balance.3) Make sure that you are making the minimum payments on all other cards, and applying the additional money towards the account that you want to get paid off first.

4) When the first account in your creditors list gets paid off, take the same amount you were paying on that debt and add it to the minimum payment of the next account.

5) Repeat the same strategies until all the accounts have been paid off.

By using the snowball method, the total amount of debt should rapidly decrease, especially as your payments made becomes a bigger snowball with each account paid off. This is the best way to get rid of the overwhelming debts. Once you have come out of this mess, take control on your finances and make sure that you don’t repeat your previous mistakes again that put you into debts. Credit cards debt problem can also be solved by using debt snowball method. Just follow the above mentioned directions to move towards a debt free life.

This entry was posted on Wednesday, November 12th, 2008 at 5:51 pm and is filed under Debt. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.