How to Get Rid of Credit Card Debt

Have you ever heard of the Debt Snowball Method from Dave Ramsey?
It’s a method that I highly recommend for people who have a difficult time paying off credit card debt.

It is NOT the most optimized method in terms of spending the least amount of money in order to pay back the debt. It is also not the quickest way. But I have found that it is the preferred method for those who have success stories to tout.

The snowball method is very easy. Here are its basic steps.

Debt Snowball Method

  1. It requires that you have all of your debts noted in a list somewhere.
  2. You then need to prioritize those debts from smallest to big.
  3. You want to pay the minimum monthly payments required of each credit card at the end of every month.
  4. Any extra income you have, you funnel into the SMALLEST credit card debt you owe.
  5. Once you pay off the smallest debt completely, you want to snowball what you were paying towards that credit card into the next smallest debt next month. Meaning, if you were paying off $200 a month towards the smallest debt you owe, you will have $200 extra to funnel into the next lowest debt next month.
  6. And so you proceed until you’ve paid off the smaller credit cards and can focus on the larger ones.

Why This Works

  • We as humans are highly motivated by small wins. Something happens to our brains when we succeed. A neurochemical is released and it motivates us to repeat successes, in order to gain that happiness boost. Therefore, since it is easier to get smaller debts out of the way, we use that ease to train our brains into wanting to pay back debt.
  • Smaller debts are more manageable. It is easier to keep larger debts on auto-pay while we tackle smaller numbers.
  • When you see a large percentage of a debt get paid off, you become more excited about your contribution. Imagine paying the same amount to a large debt. It may be discouraging if you feel like your contribution went nowhere.
  • We start building a habit of putting extra money, no matter how little, into the smaller debt. Since we develop that habit, it doesn’t affect us greatly when we funnel money into a larger debt later on. Habits are at the core of good personal finance.

As I have said before, this is neither the quickest or economic plan to paying down debts. But if you are the type who have struggled in the past, this may be a more manageable path for you. Later on, after you’ve exercised your budgeting skills, you can switch towards paying off the higher amounts with higher interest rates.

If you have trouble paying off your credit card debts, you can always try The Credit Pros. They will help identify the most damaging and most helpful credit items, as well as provide advice and educational tools.