J.D. Roth at https://www.getrichslowly.org relates how he got out of debt.  He used his ‘snowball debt’ method.  I took the liberty and re-told his story so you can better understand how to get out of debt.  Instead of using ‘HE’, I use ‘YOU’ through this example.

You start with the smallest of your monthly debts (example $50.00).  You eventually paid off the smallest debt.  You take the monthly money you were paying to pay off the smallest debt (example $50.00) and add it to the next smallest debt ($75.00).  This way you are now paying a total of $125.00 instead of $75.00 to pay off his next debt.  You paid off that debt and now focused on your next debt (example $175.00). You take the money you were paying on the 02 smallest debts you no longer have ($125.00) and now added it to your next debt of $175.00 + $125.00 = $295.00.

Now you eventually paid 03 debts amounting to $295.00 per month.  Now you add $295.00 to add to your next debt, your $400.00 car payment.  Now you’re paying $695.00 towards each car payment instead of $400.00.

You pay off your car 02-years early and now have $695.00 towards his next debt, your house (30-year mortgage).  Your house payment is $600.00 a month.  You’re now making $1,295.00 each month towards your house payments.  At this rate you’ll have your house payed of in less than 15-years instead of 30-years and will save tens of thousands of dollars on interest.

This is most important.  The ‘snowball debt’ always starts with the smallest debt and works up to the next smallest debt.  This way you can see your progress and won’t give up getting rid of all your debts.  If you started with your largest debt, your house, the ‘light at the end of the tunnel’ is a long long ways off and odds are you’ll give up and stay in debt for all or most of your life.  Again, go to J.D. Roth’s website at  www.getrichslowly.org

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