To keep your snowball rolling!
The snowball method of paying your credit card debt aims at your mind. You start targeting credit cards with small balances and gradually get financial strength to get rid of the larger balances. As your get initial success, you get encouragement to look forward to take bigger target. The system will certainly help 90 per cent of the people sinking in credit card debts. However, to be successful you will have to remember the following tips –
- Keep the size of your snowball realistic – When you sit down with all the credit card balances and minimum payment obligations make a realistic assessment of your sources of income. Do not go for an amount which will be hard to set aside for payments. You can cut down on all your luxuries like switching of your cable connection or cutting on your dinners at expensive restaurants but you will have to care for all your necessities. By neglecting them you are putting the entire plan in bad shape. Once things start slipping out, you get disappointed and you may not be successful. Realistic attitude is required while setting your targets.
- Do not miss out on minimum payments on all other credit cards – Concentrating on one credit card does not mean others are to be ignored. In fact if you are unable to generate sufficient cash to pay your targeted amount, your priority should be to pay minimum balance on all credit cards.
- Do not worry about the size of payment you are making – Even though you start with a smaller payment, your snowball will get larger and larger as you complete the payment on your smaller credit cards.
- Stop consulting others for your payment plan – Some people may advise you to change your payment method and give priority to those credit cards bearing higher rate of interest. You should not listen to all such advice because of once you decide on a specific plan, it is better to stick to it.
- Avoid temptations to spend – Once you make for payments on the credit cards with small balances, you may be tempted to use those credit cards again. But do not go back on your spending habits which will drag you towards the same old indebted situation.
- Always try to imagine the debt-free situation – When you feel that things are hard, look ahead at a time when you will be totally debt-free. Even dreaming about such times will give you lift burden from your chest. Always think about the good times ahead.
- Do not stop your retirement contributions – You should not skip your retirement contribution if your employer is committed to make a matching contribution towards your retirement plan. It will not be a good decision to divert such money to make credit card repayments. You will then lose the employer contributions.
You should never live in the fear of debt. Go ahead with your plan with strong willpower. Even though you start with a small amount of money, you are going to march successfully towards your financial freedom.