Author: Brittany
As the Financial Education Team
Leader here at FSWP, I do a lot of research on different blogs about how to
deal with debt and various other financial topics. If you’ve ever researched debt payoff, you’ve probably run
into Dave Ramsey at some point or another. I know I have. Dave Ramsey's snowball method is one of the most popular debt payoff methods out there.
The Snowball Method is just one way you can pay back your
mounting debt. The idea is fairly basic: Pay off your higher interest debt
first. The higher the interest rate, the more money the debt carrier makes. If
you concentrate on the highest interest rates first, you’ll ultimately be
paying less in the end.
For example, say you have the following debts:
Car Loan: $21,000 @ 4.99%
Bank of America Credit Card: $26,000 @ 17.99%
Zales Card: $5,000 @ 20.9%
Student Loans: $35,000 @3.99%
You would concentrate on the highest rates first: B of A
Credit Card and the Zales card. Throw as much money as you can at those debts
first, while still continuing to pay AT LEAST the minimum on the other debts.
After you have paid the first off, then you choose the next highest: the car
loan. This continues so on and so forth until your debt is paid off.
Have any of you used the snowball method? How has it worked
for you?
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