Since a number of us are suffering miserably and sadly by the problems of debt and no matter how many theories, articles or advice we give out. People around the world cannot stop their hands and hearts from swiping that card to just make one more purchase of that gorgeous Hawaiian odor of the new fragrance of Calvin Klein, or since the child is nagging so much for the new Play station 4 round the block for his BD present. Or there is no harm in getting that new Sony cybershot model that just entered in the market.
We have no shame and endurance from the temptation of the many manufacturing companies and the products they make to delight our senses. So as we stay busy buried under our piles of debt, poke your head out just to listen to another theory which has been introduced by the much famed financial expert and radio talk show host, Dave Ramsey. He has come up with yet another method of paying off and getting rid of your debt once and for all. He has introduced the debt snowball calculator. Yes bring in the drum roll, since this unique and one of a kind method is suddenly attracting the rush of the financial world and the borrowing public as well.
This calculator can be applied to any kind of debt and especially to those which are revolving debts such as credit cards. Following are some steps which can be conducted while using the calculator:
List your debts
To begin with it is important that you sit down, take out a paper and pencil and list out all the debts you have from the various creditors. List them in ascending order starting with the lowest and then stepping up to the highest. It is important to clearly define the different debts you have, their amounts and the interest being charged on it. The idea of the debt snowball is to chop down the lowest debts first which will make access to big debts easier. There is no fancy way to do it so simply list out the totals in ascending manner.
Fire off with the minimum loan
Start off by paying at least the minimum on these debts, for instance if you have credit card debts, its best that you start of by paying the minimum on your debts even though interest rate will make the amount increase it will provide you with a better credit standing than from your initial stage. The objective of the debt snowball in the long run is to make you debt free, on the other hand its short term goal is to start lifting your credit scores from the ground. Though the journey of becoming debt free may seem like a long road disappearing into nothing, its goal is to take you step by step compiling to your financial obligations so that even the tiniest spot of debt is erased.
What’s now is now
Taking into consideration your current budget amount since then will you have an idea of whether you have the finances to pay off the debts. It’s in your best interest to pay a little extra on your minimum amount judging your current budget if it allows you too. It puts you on a better stance, since paying more than expected will cover grounds for you. For example if your actual amount on the debt is $400 per month, than opt for paying $420, all these payments need to be listed down because in order to take the next step you may have to refer to the first step.
Step by step
Now that you are assured that the first step has been covered successfully than move on to the other step. Perform the exact manner of payment as you had done in step one, paying off the maximum that you can for that month. Since eventually you find yourself on a better stance compared to the previous position, it may not seem like a leap to you but it has made you a little bit out of debt. And so repeat this process until you reach the large debts, keep the patience intact and remember that this free- advice will take a considerable amount of time to work.