Get Out Of Debt

When bills are piling up and there just isn’t enough money to take care of even the most basic requirements, single moms can be overwhelmed with debt. But there are solutions that don’t include bankruptcy or destroying your credit in the process.

One of the most effective solutions to get out of debt and take control of your finances is a program called the “Debt Snowball.” Here’s how it works:

To begin the debt snowball, start by listing all of your debt and the minimum monthly payments. List the smallest debt first, all the way up to the largest. Don’t pay attention to interest rates – just pay attention to the balances.

Commit to paying the minimum balance on everything each month. Start with the lowest balance as your goal – you want to pay it off, and fast. If you have extra money at the end of the month, add it to the payment for your smallest debt. The goal is to pay it off as quickly as you can.

Got the first debt paid off? Great! Remember the minimum you were paying on it? Take that minimum and apply it to the next-highest balance, in addition to the minimum. Now you’re paying twice as much, and you’re paying the debt off faster. It is snowballing!

By focusing so clearly on the smaller debts, you get them paid off faster, and you don’t have so much worry hanging over your head. Once the smaller ones are paid, you can move to the bigger ones, and make larger payments. The larger payments will then begin to eat into the principal of your debt, which is the big key to making it all go away faster. The less principal you have, the less interest you accrue, and that means lower balances.

Starting with the smallest debts first also give you the power to stay motivated. If you are throwing money at a huge debt and not seeing much satisfaction from it, you’re not going to stick with the plan. But with a debt snowball, you are paying off more and more, and you can actually track your progress to determine how long it will take you to get out of debt.

The debt snowball is the single best single mom debt program anywhere, and you don’t have to pay a credit counselor or financial adviser to teach you how it’s done. Now that you know, start rounding up those balances and put them in order. Which one will you be tackling first?