As a small snowball rolls downhill gathering more and more snow, it gains both size and momentum. This is the idea behind the Debt Snowball method for eliminating your debt:
Step 1: List your debts from smallest to largest.
Step 2: Make minimum payments on all your debts except the smallest.
Step 3: Pay as much as possible on your smallest debt.
Step 4: Repeat until each debt is paid in full.
List your debt in increasing order by your smallest to largest debt:
Medical Bill- $25 monthly payment,Total left on bill = $135. <<<<< Smallest debt.
Furniture Bill- $75 monthly payment,Total left on bill = $766
Credit Card Debt- $12 monthly payment, Total left on bill = $1536
Car Payment- $279 monthly payment, Total left on car = $7836
Student Loan- $80 monthly payment, Total left on loan = $21,345
Make Minimum payments on debts #2 through #5.
Now FOCUS on the smallest debt #1. Squeeze as much money out of your budget as you can and budget it toward debt #1. Each month, continue to FOCUS on the smallest debt while making minimum payments on the others. Each time a debt is eliminated, you'll have more money to apply to the rest.
For more information, see: Debt Snowball method
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