Many concepts and methods have been derived to pay down Credit Card Debts; “Debt Snowballing” is also one among them, which was firstly introduced by famous personal finance guru, Dave Ramsey. Debt snowballing is a technique adopting aggressive approach towards reducing credit card debt by strategically making minimum payments.

Though, this procedure demands introspection and discipline, but once implemented it can result in significant improvement in your personal financial position.

Process of Debt Snowballing

If balance transfer credit cards are not an option, ‘debt snowballing’ could be a good choice in paying off the credit card debt. First of all take your budget and work out how much you can spend for debt reduction. Here Dave Ramsey urges that make it sure to cut down unnecessary outlays; this will help you in making more money in hand for paying off debt. He even suggests starting a second job in order to make aggressive debt reduction much easier. Anyhow, you must re-evaluate the budget and calculate how many bucks you can spend each month for debt reduction.

In second step, make a request for your credit card debt. For morale reasons, Ramsey drops a proposal that you should make a list of your smallest balance first of all; in this way you will get able to receive encouragement by paying off debt. By making list of credit card balances according to their interest rates you can save maximum sum of money. Similarly, list your minimum payments.

Below I am showing a pattern of a possible credit card debt list:

• Credit card No. 1: $900, $25 min. payment
• Credit card No. 2: $1,300, $40 min. payment
• Credit card No. 3: $2,900, $89 min. payment
• Credit card No. 4: $3,500, $98 min. payment

Suppose you receive $200 each month, which you plan to spend for debt reduction of any credit card. So, by taking that $200 and adding it to the minimum payment of credit card No. 1, you will get able to increase its monthly payment up to $225; pay it till it is paid off. Along with it, keep on paying rest of the minimum payments as usual.

After paying off your first debt, repeat the whole process with second payment. Take that entire $200 and use it for your next minimum payment of $40; it will sum to a total of $240.

This is a continuous procedure in which you keep on adding to your minimum payments. If it is possible for you to add more money to this debt snowball, then it is good in paying off the debt faster.

If you decide to concentrate your payments through debt snowballing method, this will enable you to use your money to maximum advantage while paying off debt, which ultimately facilitates you in paying off your credit card debt in a short time.

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