CSM: Help Get Out of Debt

Snuff’s Common Sense Money Report: Debt

Okay, so clearly there’s a lot of people in debt. I’m one of them, i would bet you might be too. So here’s a little system that i learned about to help with multiple debt accounts, like several credit cards. There are no gimmicks or anything, just discipline. It’s called the snowball method.

The idea is this, organize yourself. Get all of your bills in front of you, prioritize them. Your heat, electricity, mortgage etc. those are all the most important so budget for those first. Look at what you spend on food and gas and see if you can’t cut some costs there. Every little bit helps. Then look at your credit cards and installment loans.

Take those and work out how much it would cost to pay the minimum each month for those. If you can’t, worry about things like car loans first, because that’s what gets you to work.

See if you can’t get a deferral on your student loans.  Credit cards should be last. Even though your credit score is important, it is not the end of the world. In light of the current state of things, credit card companies might be willing to help you out a little.

Then STOP USING YOUR CREDIT CARDS! Stop falling deeper into debt. Live with what you’ve got. This doesn’t work if you keep charging.

Once the minimum budget has been determined, see if you can squeeze out another $50 bucks somewhere. List the debts in the order you would like to pay them off, and on the top priority pay the extra $50 you found.

After many months of paying off with the extra $50, you’ve finally paid off that first debt. Exciting. Now take the $50 AND the minimum payment of the debt you’d just paid off and pay that on top the next debt. Thus creating the snowball effect. Repeat as necessary for as many debts as you might have.

It’s not quick and it’s not easy, but it gets the job done. Debt is a monster, and once it’s got you, getting away can be the most difficult thing you ever do… if you ever do. Good luck to you.

P.S. If anyone has any other ideas to help get out of debt, drop a line in the comment section.