Entries Tagged 'Debt Elimination' ↓

What is a snowball?

Starting a snowball is a method over paying off debts. Starting small leads to big payoffs as the debt reduction snowball rolls down hill… growing bigger as each debt is paid off. It is the process of paying the minimum plus a little extra each month on one of your debts while paying only the minimums on all the rest. Once the first debt is paid off, the entire amount that you were paying on that debt -the minimum plus the extra- is added to the minimum on the second debt. In this manner all of your debts will get paid off, faster and faster, as the snowball of debt reduction rolls down hill.

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If you have been around the field of personal finance for any amount of time I am sure you know the concept of the emergency fund. If you have an adequate emergency fund you will be covered in case the dryer breaks down, or the car, or -God Forbid- you loose your job. The point of the emergency fund is just that, to care for you in times of emergency.

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 Is your debt taking over your life? Try asking yourself these questions: 

• You are always broke, living paycheck to paycheck
• You consolidate your debts only to keep using the old credit lines
• You carry a balances of more then 30 percent of your credit limits
• You only pay the minimums
• You use your credit to afford things like food
• You charge more then you make (If so, you need a budget(LINK))

Did you find yourself nodding your head yes as you read that list? If so then there is a good chance that your debt is getting out of control.

If so, don’t kick yourself too hard. According to MSN Money about 43% of American families spend more than they earn each year and the average household carries $8,000 in credit card debt.

Congratulations… you are average!

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