Snowball Method For Debt: Paying Down Credit Cards + Student Loans

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Ok so, you probably have rent or a mortgage and bills to pay. Add on credit card debt and student loans and it can start to feel overwhelming. So, where should you begin? 

Anthony ONeal, financial expert and author of the new book Debt Free Degree, recommends using the snowball method for debt. 

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Before you start paying off debt though, Anthony's first piece of advice is to have a budget. This should consist of what he calls your 4 "walls": Rent and utilities, clothing, transportation and food.

Once you have a budget established and you're able to pay your monthly rent and utility bills, regularly buy groceries and so on, the next step is to make all of your MINIMUM payments on credit card debt and student loans. 

Next, start working toward establishing an emergency fund, the expert says. Your goal is to have $1,000 in this emergency fund. Once you've reached that milestone, pause and put any extra money you have each month towards paying off your debt and student loans.


The debt snowball method involves paying off bills in order of smallest to largest, regardless of interest rate. (In other words, if your credit card debt is less than your student loan debt, attack the credit card debt first.)

Start by listing all of your debts from smallest to largest — again, regardless of the interest rate. Then, make minimum payments on everything except the smallest. Attack the smallest debt "with everything you have — sell stuff, take on an extra job," whatever you can do.

Once that smallest debt is paid off, take its payment and any extra funds and apply that to your next smallest debt while continuing to make minimum payments on the rest.

Repeat this until you are debt-free.

Finally, once your debt is paid off, you can go back to putting additional money into your emergency fund. Ideally, you should have 3-6 months of expenses saved to cover you in case of an emergency.

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