The Debt Snowball

The Debt Snowball

Length: 618 words (1.8 double-spaced pages)

Rating: Excellent

Open Document

Essay Preview

More ↓
The Debt Snowball
When you get to the point where debt becomes too much you begin to search for a way out. There are many different options to get rid of their debt; one option is the debt snowball. This debt relief option sounds more unusual than it really is.
What is it?
What is the debt snowball? It is a very widespread approach used to relieve an individual of any debt. If you can picture a snowball it starts of small, and then it gets bigger as it picks up momentum. The debt snowball also can gain momentum as you pay off your debts.
The debt snowball method was made popular by a man named Dave Ramsey. This method has gained recognition because it is the most common debt reduction method that many financial experts teach.
The Process
The way to begin a debt snowball is simple. Write down ALL of your debts. Do not forget any no matter how small or insignificant they may seem to you. The next step to do will be to place the list in order based on amount of owe. Start with the smallest debt on top and the largest debt on the bottom.
Start the debt snowball by paying minimums on all of your debts except the smallest one. Place any extra money to that smallest debt. This will make that debt paid off much quicker.
After that balance has been paid off, you are able to place not only the extra money each month, but now also the minimum balance of the first debt you paid off. You complete this process for each of the balances going down the list. As you, pay off one debt the amount that you have available each month will increase and you will begin being able to pay off other debts quicker.
Better Method
This one question has never been answered beyond doubt. There are people that say yes this is the best way, there are others that do not believe this is best.
It would appear that a debt snowball could be mathematically unbeneficial. It would seem that paying off the highest debt or the highest interest rate might be better options. In this situation, a person is not looking for the math to work, but to find a way to feel like you are getting somewhere. There are so many reasons that people keep trudging on when it comes to relieving debt.

How to Cite this Page

MLA Citation:
"The Debt Snowball." 123HelpMe.com. 25 Mar 2019
    <https://www.123helpme.com/view.asp?id=364706>.

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Essay about National and World Debt Crisis

- ... Opposing the general idea, governments do not produce the majority of our world's money; in its place, it is created by private banks as a loan. The private bank of money created has grown so influential over the centuries that it has come to rule populations globally. However, the structure contains the seeds of its own devastation. The error is that banks advances credits that have to be paid back with additional interest after a certain period, while the banks have no requirement to pay out the interest they collect, so that borrowers can earn it back, as they must in order to shrink the global debt....   [tags: cost, currency, exchange, credit, budgets]

Research Papers
700 words (2 pages)

Proactive Steps to Remain Debt Free Essay

- ARTICLE TITLE: Proactive steps to remain Debt Free ARTICLE BODY: For everyday purchases it is better to use cash and do not take any debt. Although it is accepted for long term purchases like auto and home. Try to save more from your earnings or try spending less. It simply means enjoy less say 40% and save more that is 60%. Prepare a monthly report of your debts. Calculate all the interest, balances and payments. Add and subtract all in a spreadsheet to summarize and get the grand total. Update it and get motivated every month by paying off your debt....   [tags: Finance]

Research Papers
543 words (1.6 pages)

Debt Free Forever By Gail Vaz Oxlade Essay

- Debt is heavy. It sits on your shoulders and weighs you down. Debt is also addictive. It 's easy to throw something on credit when you don 't actually have the money to buy it. It gives you instant gratification, and that can feel good - in the moment. But, for many people, there comes a point where they can 't use their credit anymore and debt is all they are left with. The stress of having to pay it all off can take its toll on your happiness and health, so you must come up with a way to get out of debt and start living a debt free life....   [tags: Money, Payment, Credit card, Want]

Research Papers
726 words (2.1 pages)

What Would You Do If You Have $ 15000? Essay

- What would you do if you had $15,000. Would you give some to charity, or perhaps buy a new car. Maybe you could finally get that watch or purse that you’ve always wanted. The problem is that many people thought they had this much money. Unfortunately, it was all on a credit card and now they are paying 18% extra on their purchases; in some cases, even more than that. That equates to you paying roughly $18,000 dollars for something that only cost $15,000. Many Americans are faced with these bills today, but there is hope....   [tags: Money, Debt, Payment, Interest]

Research Papers
1348 words (3.9 pages)

Analysis Of Dave Ramsey 's ' The Total Money Makeover ' Essay

- “The Total Money Makeover” is radio star and financial speaker Dave Ramsey’s viewpoint, ideas and techniques on the financial world put into words that are not only simple, but super helpful to those seeking motivation in their financial lives. Throughout this book Dave Ramsey projects his attitude on how to begin a debt free life. In this particular book Dave Ramsey constantly presents the ideas of an emergency fund, myths and truths, savings, loan and credit card use. Out of all these chapters the most important and useful information I learned was the obstacles in getting to a debt free life, Ramsey’s Seven Baby Steps and the priorities of money....   [tags: Investment, Debt, Money, Finance]

Research Papers
724 words (2.1 pages)

Essay on What Caused the European Financial Crisis and How Can We Fix It?

- The European Financial Crisis A Look at What Happened And How Can We Fix It 1. What are the causes of the European financial crisis in a nutshell. The European financial crisis is due to a few factors. One factor is the borrowing of money. Countries in Europe were able to borrow money at relatively low interest rates. The low interest rates lured countries into borrowing large sums of money. The promise of a low interest rate made the repayments affordable and reasonable. There was a period of euphoria where money was being borrowed and paid back without any issues....   [tags: interest rates, debt, collapse]

Free Essays
579 words (1.7 pages)

Becoming A Successful Entrepreneur Of College Students Essay

- The majority of college students seem to be working hard to balance their rich social lives with studying for exams, finding a flexible part-time job, and lining up some resume-building extracurricular activities.However, there are always those few students, stuck in a corner of the library, trying to pick the next great stock. If you, like them, are interested in learning more about investments, then the following tips are for you: Read as much as you can Reading numerous online articles and books on investing will give you the knowledge and understanding you’ll need to become a successful, savvy, investor....   [tags: Finance, Investment, Debt, Rate of return]

Research Papers
839 words (2.4 pages)

Will This Recession Change America Forever? Essay

- Will This Recession Change America Forever. Many people are not graduating high school, not going on to attend college, or going to college, but eventually dropping out and failing to get a degree. In fact, it is written in the article The Economy Is Still Terrible for Young People by Derek Thompson that “about 60 percent of this generation doesn’t have a bachelor’s degree” (Thompson). Why is this. The great recession is affecting college students and graduates in many ways. After graduating, students can not even find jobs, leading to higher unemployment numbers....   [tags: Debt, University, High school, Great Depression]

Research Papers
732 words (2.1 pages)

Debt : Debt And Debt Essays

- So many people have loans and debt in a variety of places. They have a mortgage on their homes, credit card debt, student loans, car payments and so forth. Many times, the interest rates they are paying on any one of these loans can be enormous. Many credit cards charge upwards of 18%-20% interest rate, while store cards can carry an annual rate up to 30%. If you have a few hundred or even a few thousand dollars in credit card debt, you could be paying a huge amount in interest each month, making it almost impossible to pay off this debt....   [tags: Debt, Money, Payment, Credit]

Research Papers
738 words (2.1 pages)

Debt And Debt Of Debt Essay

- Mortgages, car loans, student loans, and having children, are all situations that can drive families to the overwhelming doom of debt. Debt is mostly overlooked for the simple reason that it may be considered normal. Certain types of debt like car and mortgage payments are almost expected. Debt is sometimes very difficult to evade, especially if money is not managed sensibly. Many families accumulate debt due to overspending, medical bills, and unemployment. Credit companies and banks make it very easy for families to spend money they do not have....   [tags: Debt, Money, Payment, Loan]

Research Papers
762 words (2.2 pages)

One of the biggest reasons that a person keeps moving forward is by seeing that the debt snowball is actually working. Watching the number of debts that you have being reduced is a great way to see your debt disappear.
Tips
There are several different things that you can do to help along the process of the debt snowball.
 It can be important to use intensity to your advantage.
 Take note that many lenders (car or mortgage lenders) usually apply any extra money to the next month's payment. Keeping in contact with your lender to let them know you want it to be applied to the principal.
 Keeping a budget can be very important to the debt snowball process.
 Everyone involved in your finances needs to be involved in your plans to use the snowball method.
 It can be very important to make a true commitment to use any and all unexpected money that you gain towards paying off your debts.
 With a goal in mind you will can always get better results.
 Be patient, it takes time to get your debt snowball rolling. Set yourself up a payment plan and use it get you motivated to help you get the ball rolling.
 Creating a worksheet, projecting the amount that should be required to pay all your debts, as well as determine a timeline to have a completed paying off all your debts.
 There maybe times that you will need to earn extra money to begin the process. This can be through a part time job, freelancing, or even side work for friends and family.
There are many different reasons that a person might want to get rid of their debt. There are even many different ways to get out of debt. However, one of those ways is through the debt snowball process. Starting from the lowest to the highest debt can be a great way to see the results of your debt disappearing quickly.
Finding the best process for you when trying to relieve yourself of debt can be one of the most satisfying rewards. The debt snowball may seem like a long process; from the beginning, you will see changes in your debt. Being able to see your debts reduce quickly at first can be a great way to motivate yourself to continue the debt snowball process.

Return to 123HelpMe.com