"That includes paying off your debts in order of smallest to largest. In doing so, list out all of your debt, including student loans, car payments, mortgages, credit cards, etc. Then, as noted by Ramsey Solutions, "Make minimum payments on all debts except the smallest-throwing as much money as you can at that one. Once that debt is gone, take its payment and apply it to the next smallest debt (while continuing to make minimum payments on your other debts).""
"Step 1:List your debts from smallest to largest (regardless of interest rate). Step 2:Make minimum payments on all your debts except the smallest debt. Step 3:Throw as much extra money as you can on your smallest debt until it's gone. Step 4:Take what you were paying on your smallest debt and add that to the payment on the next-smallest debt until it's gone too. Step 5:Repeat until each debt is paid in full and you're completely debt-free!"
Seventy percent of American households are not financially healthy, with day-to-day financial realities worsening for many. U.S. household debt has risen to $18.2 trillion, including $12.8 trillion in mortgages, $1.64 trillion in auto loans, $1.63 trillion in student loans, and $1.18 trillion in credit cards. The debt snowball method targets balances from smallest to largest by listing all debts, making minimum payments on all but the smallest, and directing extra funds toward eliminating the smallest balance first. After each debt is paid, its payment is applied to the next smallest until all debts are cleared.
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