After all, it’s hard to find a family that doesn’t have debt hanging over them. In this day of easy credit and deferred interest, it’s not hard to accumulate sizable financial obligations.
It is possible, however, to become debt free. One method, the so-called “snowball” method, can be an effective way to get on top of those seemingly never-ending payments.
When you think about tackling your debt, it might make sense to pay off the obligation you have at the highest interest rate first, when you look at it mathematically. But sometimes the highest interest rate debt may also be the largest amount you have to deal with, which might create frustration if the balance is going down too slowly. The debt snowball method can seem counterintuitive because it doesn’t always follow the math, since in most cases, the math favors paying down the debt with the highest interest rate first. The snowball method instead focuses on building momentum – the idea that small successes can lead to larger successes. Paying off the smallest balance first can build momentum to plow through the next largest balance, then the next one and so forth – like a snowball gaining size and speed as it rolls down a hill.