Snowballs...

We got our first snow of the year last week. Man...it's way too early for snow. We're in for a long winter. I really hate winter. Anyhow, we decided to make the best of it and make snowmen. To make these snowmen we had to make giant snowballs. We started with a handfull of snow and rolled it around in the snow as it packed on and got bigger and bigger.

All of this snowball making reminded me of the Debt Snowball concept that Dave Ramsey talks about. Here's how the concept works:

1. Destroy/close credit cards - they can't be used
2. Squeeze a little bit of extra money from the budget every month
3. Make a list of all debts from smallest to largest on a piece of paper
4. Apply the extra money that was found to the smallest debt while paying the minimum monthly payment on all the other debts
5. When the smallest debt is paid off, combine everything that was being paid on that debt with the minimum payment amount on the next smallest debt while paying the minimum monthly payment on all other debts.
6. Repeat until all debt is paid off.

The snowball affect comes as each debt is paid off. As each debt is paid more money is available to attack the next debt. This is an effective and proven way to get out of debt. However, it takes time and requires intense focus from start to finish. It only works if no new debt is added which is why #1 and the budget in #2 is so important.