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by: LandonMcGehee
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There are many debt reduction options to choose from when seeking out ways to improve your financial situation. Not all options are equal, however. What works for one person, may not help the next.

The first, rather obvious way to lower your debt load is simply to pay down your debts. It may seem impossible, but one method helps to make it more feasible. This method, named the snowball method by finance expert Dave Ramsey, has been proven to work wonders for people.

The snowball technique is quite simple. You begin by ordering your debts from lowest to highest. Then, you pay the minimum required amounts on all of the monthly debts. After that, you should put whatever money is left towards paying off the smallest debt. So, the smallest debt will get paid off first. You can then move onto the next smallest debt, etc. You should repeat this process until you are in the financial situation that you wish to be in.

The advantages to this method include visible progress in reducing your debts on a regular basis. You will begin to see results very quickly, solving your problems more quickly than you would expect. As debts get paid off, you will have more free income to put towards the larger debts, further speeding up the process.

Once you get to a more comfortable point, you can feel more free to reward yourself with spending some of the money on fun things (but don't get any farther into debt by doing so).

When you see progress and reward yourself, you will have psychological motivation to continue.

The main drawback to the snowball method is that because of compounding interest, it will take more time any money overall to pay off your debts.

For example, if you pay off a $1,000 debt, a $2,000 debt and a $10,000 debt they may all have the same rate of interest. But, if you pay the lowest amount first you have to pay more in interest because you are paying interest on the highest amounts of debt for longer periods of time.

Paying the highest debt first will save you money because you are lowering the amount of interest that you must pay. So, this method is more cost effective, but it takes a lot of discipline to stick to because the largest debt is being slowly reduced. Results are seen less quickly. It takes a lot of willpower to pay high monthly payments when it seems like not much is happening to lower your debt. Some go the route of using a lower interest balance transfer credit card to handle their unsecured debt.

Lack of willpower can easily get you into debt, and it can make it hard to get out of it. You must find the desire to work through the difficult times. The snowball method can help with this, even though you will pay a larger amount over time. You will fill financially successful as you make progress.

About the Author

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