If you feel like you cannot get ahead of your accumulating debt, you may have to find ways to make payments that make a difference in your overall debt. If you like to see success quickly, you may benefit from the snowball method.
The U.S. News describes the snowball method as a repayment strategy where you prioritize the lowest balances first.
How can you use the snowball method?
To use the snowball method, list out all of your debts. Select the credit card or loan with the smallest balance and pay above the minimum payment on that particular debt. Do this until you pay off the debt. While focusing on one debt, you can pay the minimum on your other cards and loans. This allows you to pay one debt off faster than the rest. Once complete, turn your attention to the next smallest amount you owe.
How do you benefit from the snowball method?
If you need an extra push to pay off your debt, the snowball method may serve as motivation. For example, if you tackle the biggest debt first, it may take a lot of time to see the fruits of your labor. However, taking on smaller debts may pay off one credit card or loan quickly. When people see success, they tend to stick with their debt repayment plan for longer.
Like most Americans, you probably have various debts, from loans to credit cards. When you have more than $5000 in debt, you should start focusing on repayment plans or other means to reduce what you owe.