It’s too easy to accumulate debt and, like packing on a few pounds, can feel near impossible to lose. For those of us who carry a balance, here’s one method of payment that has turned many a debtor into a debt-free winner. It’s called the Snowball method of payment.

Before you begin, call the card companies and see if you can get the interest rates decreased. Many times if you tell the phone rep that you are prepared to transfer balances to a lower interest card, they’ll happily comply. If not, you may want to go ahead and make the transfer after all. Just beware of a possible transfer fee (generally 3% of the amount). Read the fine print, it’s all there if you look.

Here’s how you do it:

First, Divide your credit card bills from smallest to largest. You’ll begin by paying the minimum payment for each bill. Before long, you will have paid off the first (and smallest) bill on the list. When this happens, you are ordered to give yourself a personal celebration. Just don’t charge anything.

Next, add that same payment to the next bill in line. What a great idea! Now you’ve accelerated your payments and it didn’t even hurt–your monthly outlay is exactly the same. Eventually, you’ll have paid off the next card on the list, again a little celebration, and so on until the last bill is out of your hair.

Anytime during your payment schedule, should you happen to have a few extra dollars, add it to the payment of the smallest card currently on the list. Accelerating payments makes a world of difference when it comes to eliminating debt.

I’m Confused

Wouldn’t it be smarter to pay the highest interest card off first? Technically, it would, as long as you were able to pay it off at the same rate as your Snowball plan. But the savings wouldn’t be great and, more importantly, you’re much more likely to stick to the plan if you have something to show for it (i.e. one less bill on the stack).

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