Deflate Your Debt Problems with Snowballing!

Many economists have suggested strategies to reduce your debt quickly and efficiently. Out of those, snowballing method is gathering plenty of ice these days. This method is very useful for getting control over your revolving debts - debts created due to spending on credit cards. The method is closely oriented towards your emotions.
When you are overburdened with debt, especially with a lot of credit cards, you get restless. You really want to get rid of it, but you don't know where to start. The debt snowballing method comes to your help in this situation.

How to chuck your debts by this method -

1. Make a list of all your credit card debts - You should not include your mortgage payment obligations under this method because mortgage is not a revolving debt. Then you should arrange all the debts in the ascending order - credit cards with smaller balances will be on the top of the list and the larger balances will be at the bottom. You will get a shock to realize the magnitude of your shopping!

2. If the balances of two credit cards are similar, you should give priority to the balance with higher rate of interest.

3. Write down the minimum payment obligations against each balance. Take a total of all such minimum payments you have to make in a month.

4. Find out how much extra cash you can spare every month towards clearing your credit card dues.

5. You have to pay the minimum balance due on each and every credit card but you can use the extra cash towards payment of the credit card having the lowest outstanding balance.

6. As you go on making payments as per your plan, you will be able to complete the payment on the credit card with the lowest balance in a short time.

7. Now you can scratch this credit card from your list and concentrate on the next one in the order. You will have more money to pay for this credit card as you will add on your money which you were using for the payment of the first credit card. This will accelerate the process of payment and you will be able to complete even the payment of the second card perhaps quicker than your expectations.

8. Continue this process up to the time you pay the balance outstanding on all credit cards. Now you can spare more and more amount towards re-payment of these cards as the money used for payment of your smaller cards is now available for this re-payment.

9. Finally you will clear of outstanding balances on all your credit cards. Time to celebrate!

This theory mainly works on psychology. As you begin with your smaller debts, you end up clearing them faster. This gives a pat at your back and you eagerly look forward to clear the next outstanding balance.
You should take only one precaution - avoid making any further addition to your credit card balances by shopping further! Just take scissors and cut the credit cards which are fully paid!