If you’ve been tracking expenses, budgeting, and cutting costs, you’ll have an accurate picture of what you’ve really been spending your money on, will know what your fixed expenses are, and will have found ways to reduce your spending.
Next up is putting that knowledge into action with the debt snowball method.
To use the debt snowball method, take a look at your existing debts and decide which one you want to focus on first. You’ll then pay only the minimums on everything but the chosen debt.
How do you decide which to focus on?
Well, there are two schools of thought on how to implement the debt snowball method. One (popularized by Dave Ramsey) is to list your debts in order from smallest to largest, regardless of the interest rates you’re paying. Then you begin with the smallest debt. The idea behind that is that the psychological boost you’ll get from paying off debts quickly will keep you motivated.
The other way is to list your debts in order from highest interest rate paid to smallest interest rate, regardless of the total amount owed. The idea behind that is that you will pay less interest.
Either way, you’re probably talking about only the smallest time and interest difference between the two methods.
Know yourself
Deciding which method to use is a matter of knowing yourself. For me, it would drive me crazy to pay on something that’s at 11% interest when I could be paying on the debt at 21% interest. I also know that I have great stick-to-it-iveness even when it seems like there’s hardly any progress being made. So I would choose method two.
Most people have a lot more success with the lowest balance method though. It’s common though to get really excited at seeing debts wiped out quickly and to get depressed at any seeming lack of progress, so in those cases method one would probably work best.
The point is to choose whichever method works best for you. They will both work if you stick with them, but one will be easier than the other for you.
Get started
Next, take every extra cent you can find in your budget (or make by selling things you no longer need, doing surveys, babysitting, getting a second job, etc) and send it and whatever extra you had been paying toward your other debts to debt you’ve chosen to focus on first.
Unless there is a penalty for doing so, make a payment as soon as you get the money. Have an extra $5 today? Go online and make a $5 payment toward your chosen debt. Get an extra $20 tomorrow? Do the same thing. Don’t wait until the bill is due or until you have a certain amount “saved up”. Just pay every chance you get. (Just remember to make the regular payment before the due date as well.)
Once your chosen debt is wiped out, choose the next debt in line to focus on. Your debt repayment will snowball faster and faster, because as each debt is paid off, you’ll be able to use the money you were paying toward that debt toward the next debt in line.
Remember to celebrate each step of the way, because paying off debt is a great feeling!
I'm Jackie Beck, personal finance writer and creator of 
When I first conquered my credit card debt, I used the snowball method without realizing this method had a name. I felt successful paying off card after card. If I didn’t have a plan, I’m not so sure I would have been able to pay off the $9,000 in debt!
I basically did the same :) Congrats on getting $9,000 in debt paid off!