Step Two: Create a Debt Snowball
Many have tried swapping cards, used low interest loans, paid off the debt with the largest interest and used debts to pay debts but still have not gone out of debt. If you are tired of swapping cards and personal loans, then we can try creating a debt snowball.
Prioritise the smallest debt first and when the smallest debt is finished, use the money that is allocated for the smallest debt to pay for the second debt and so forth. Create a debt snowball to crush other debts. The momentum of the small debts being paid first will keep you motivated in dealing with larger debts.
How can you do this?
Again, look at your financial statements and arrange your debts from the smallest to the largest.
Arrange direct debits to avoid penalties.
Negotiate with banks to reduce your credit card cost.
Cross it off as it gets paid off.
Use the money for the debt recently paid in paying for the next debt and so forth.
Next Page: Step 3 - Increase Your Emergency Fund