A Snowball Alternative
Since the main goal of debt reduction is not only to reduce debt in the quickest possible way but also to make sure that the debt is actually reduced, it's important to understand the way that you view money. If you view money emotionally, then a better way to reduce debt might be to focus on the debt with the least amount of money to be paid off. In such a case, you would approach the snowball method in this fashion:
- Make a list of all your debts, ordering them from lowest balance to highest balance.
- Set aside a specific amount of money that will go toward paying these debts each month.
- From the amount you set aside, make the minimum payment on all debts. Whatever money is still left goes toward the debt with the lowest balance.
- When you finish paying off the debt with the lowest balance, continue the same method. Make the minimum payment on all debts and then put all of the extra money toward paying down the debt with the now-lowest balance.
This version of the snowball debt reduction is not as efficient as the classic version. You will end up paying more money in interest charges using this method. What this method gives, however, is a sense of accomplishment much more quickly than the classic method oftentimes does.
If you view money emotionally, being able to pay off a debt quickly will give you an emotional and psychological lift and keep you motivated to tackle the remaining debts.