I got my hands on my first credit card when I was at university. It was a bit like the forbidden fruit at first, I looked but didn’t touch, but, at some point, I gave in. I’m sure it must have been for some very necessary purchase at the time: a new outfit for the end of term party, travel tickets to see my friends in the summer break… But I didn’t stop at one. In fact, leaving college, relocating to a new city, buying my first property, travelling, lots of the milestones of my twenties were all with the “help” of a credit card (or two). The result: the should-have-seen-it-coming credit card debt.
Reaching my goal of being credit-card-free was a long, hard slog but small successes along the way kept me going. I used Dave Ramsey’s ‘snowball’ method.
The usual advice is to pay off the card with the highest interest rate first, but the snowball method does things a little differently.
First you revert to paying the minimum payments on your cards. You heard me right – minimum payment only. Instead of spreading your efforts in trying to over-pay each month on all your cards, focus on one. Then you tackle debts one-by-one, starting with the smallest balance first. The idea is you clear one balance and use the amount you’d budget for it each month to add to your next balance payment, snowballing the overpayment with each balance you clear.
To try the snowball method to tackle your credit card debt, follow these 6 steps:
– Revert all credit card payments to monthly minimum amounts.
– List all your debts in order from smallest balance to largest.
– Choose to focus on the smallest balance. Over-pay as much as you are able until the balance is cleared.
– Celebrate your first success! This keeps you motivated to achieving your debt-free goal.
– Tackle the next smallest balance, adding the minimum payment amount from the cleared balance to make an overpayment, ‘snowballing’ the amount you’re clearing and the speed at which you’re moving towards being debt-free.
– Keep going. Keep focused on the freedom of clearing the debt and celebrate as you see your total balance owing come down.
Have you tried using the ‘snowball method ? How did it work for you? What tips do you have to share with other Glitterati Girls who want to be debt-free?