Get out of Debt: Supercharge the “debt snowball”

If you have ever looked into strategies for getting out of debt, it is very likely you have heard of the “Debt Snowball.” Author, talk show host and personal finance expert Dave Ramsey is a huge promoter of this strategy. In fact, countless people I have met over the years have used Dave’s advice to become debt-free. Now, perhaps you would like to supercharge this (already great) strategy? That is simple– http://vbrisket.com/author/gabevbrisket-com/ make it bank-free! 

First, here is a quick summary of the Debt Snowball method for paying down credit card debt:

• The strategy is to simply focus on paying down the credit card with the smallest balance first, while making only minimum payments on the cards with higher balances. For example, if you have balances of $7200, $6500, $3900, $1200 and $800 on credit cards, you would pay the $800 balance (the smallest one) first, regardless of the interest rate on your cards.
• Mathematically this strategy is not sound, as mathematically, paying the card with the highest interest rate first makes more sense. But Dave is right, the only strategy that works is the one you will stick with–and paying off the $800 balance (quickly) can provide the motivation to then attack the next lowest balance, in this case the balance of $1200. Then paying down $1200 is even more motivation to confront the larger $3900 balance–and so on–until finally debt free.

Here is a tweak to the strategy that can help support your local community, while also working to cut any further interest payments to the banks that “helped” you into (and locked you into) your high-interest debt.

1. Gather up all your credit card statements.
2. Grab the statement for your auto loan.
3. Find a local credit union. You can review the “How to find a Credit Union” post on my site to find one. Also, review “How to Avoid ATM Fees” for more good credit union info.
4. Open a checking and savings account at your local credit union.
5. Close your bank account. Yup, cutting all the ties from the big banks (that send 100’s of millions of credit card applications in the mail) is simply a good strategy.
6.  Call 1 (888) 5″OPTOUT” (1 888 567-8688) to stop receiving any further (pre-approved) credit card offers in the mail. This is very important to stop the credit bureaus from selling your personal information to the banks. Trust me on this, they don’t sell your information to help you.
7. Meet with the credit union and inquire if they can pay off your high interest credit cards–with lower interest credit cards from the credit union. Reducing debt from 24% down to (perhaps) 10% works like “magic” to motor you out of debt.
8. Find out if the credit union can refinance your auto loan/s to lower interest rates. Many credit unions can lend at 2-3% on a auto loan, likely lower than the rate from your bank. You may even want to consider taking the maximum loan possible from your card–applying the extra “cash-out” to your credit cards.
9. Chak Two Hundred Forty-Nine TDA Apply the Debt Snowball strategy–With all your interest rates reduced and far more cash flow, the “Snowball” strategy will be  supercharged–propelling you out of debt in a fraction of the the time.
10. Never use a bank again. If you ever need to borrow, borrow from a credit union.

Please forward this to anyone you know who may have debt. With the average household in America carrying $17,000 in credit card debt alone, you may want to send this to everyone you know. If you yourself are working your way out of debt, print this post and bring it to the credit union so they can fully understand the strategy.

If you have any questions, reply below and Ill get back with you shortly. Please also tell me your success stories.

Thank you for all your support!