If you are like me, you probably have built up some fairly significant credit card debt. I have several excuses for doing so: I really needed that weekend in Vegas; the round of golf I put on the card was the best experience of my life; and I lived on it for a summer while clerking for a Judge in Phoenix while I was a law student. Looking back, some uses of the credit card were better than others. But nontheless, all the debt is still there.

I finally reached a point in my life where I have a steady job, have a wife, and want to get rid of this nasty credit card debt hanging over my head. I was actually in a bar one night playing Golden Tee with a buddy when I made a joke about having credit card debt (it probably involved the beating I was taking at the Golden Tee machine). After making the reference, my buddy said that he knew of a great way to get rid of credit card debt that actually worked and provided some positive reinforcement. As a guy with some personal finance curiousity, I was all ears.

It's called the debt snowball, and it is well known in personal finance circles. There are actually two ways it works, depending on your attitude toward debt. The first way is to list all of your debts by balance with the smallest one first. Then you take a look at all of your payments, finding out what the minimum payment is versus what you actually pay (sometimes they will be different). When you have done that, next take a good look at your finances and figure out what you can afford to pay over what you are paying now (even $10 or $20 is better than nothing). Next you take what you've been paying over your minimums and the extra money that you can spare and you add that up - this is your snowball number.

Here is where the debt snowball occurs. Once you have your snowball number, what you are going to do is take that and pay it to the lowest balance every month until that balance is paid off. For example, if you have three credit cards, one has a balance of $2000, one $1500, and on $1000, with interest rates of 7%, 12% and 3%, with minimum payments of $100, $75, and $50, and your debt snowball is $300, you would begin paying $350 per month until the $1000 balance was paid off. Here is the thing, though. Once the low balance is paid off, you take all that money and apply it to the next highest balance. So when the $1000 was paid off, you'd start making $425 ($75 plus $350) payments per month. Then the payments snowball and your debt is gone in no time.

This method is successful for a few reasons. First, it is easy to do. Second, it is easy to do repeatedly. And finally, it makes you feel good when you can see your debt being eliminated.

The other way to do the debt snowball is to take your balances, but instead of lining them up from lowest to highest balance, you line them up from highest to lowest interest rate, with the thought being that the higher the interest rate, the more money wasted paying interest. In our example, the $1500 balance would have been paid off first, followed by the $2000, and finally the $1000. It makes sense because it theoreticaly saves the most money over time.

In the end, my buddy and I enjoyed some cold beer, played some great Golden Tee, and I learned a little about personal finance. I'm happy to say I've integrated the debt snowball in my life and have shaved off quite a chunk of my credit card debt (I chose to do the smallest to highest balance debt snowball).

Remember, the hardest part of eliminating credit card debt, building wealth, and becoming your own personal finance expert is getting started!