We've developed a little process called the Debt Snowball to do one thing at a time and keep the debt reduction process simple. I have been broke. I know how scared I felt, and I know how fast I wanted to get out of debt. I know how you feel, and I have learned that what really works is unbelievably fierce, focused intensity. The principle is to stop everything except minimum payments and focus on one thing at a time. Otherwise, nothing gets accomplished because all your effort is diluted. First accumulate $1,000 cash as an emergency fund. Then begin intensely getting rid of all debt (except the house) using the debt snowball method. List your debts in order with the smallest payoff or balance first. Don’t be concerned with interest rates or terms unless two debts have similar payoffs, then list the higher interest rate debt first. Paying the little debts off first gives you quick feedback, and you are more likely to stay with the plan. Redo this each time you pay off a debt, so you can see how close you are getting to freedom.
Resources for Becoming Debt Free We have developed these resources to help you reach your goal of becoming debt free:
