How To Clear Your Debt And Still Eat
The Light At The End of the Debt Tunnel
Reducing Your Debt
You may have heard of the Snowball plan for debt reduction but do you really know what it is?
Here's how it works:
All you need is one monthly service you can cancel.
If you can cancel one service such as cable for $40.00 a month, you take that $40.00 and put it in your savings each month for a year. This will give you $480 dollars extra in savings. Now that you have this money put back, you can increase your deductible on your car insurance by $500.00.
This is because you have the money put back to cover the deductible if you have an accident.
So you are now paying less for your car insurance, let's say it saves you $12.00 dollars a month. Now add the $40.00 you were saving from the cable to the $12.00 a month insurance savings.
Now you have $52.00 dollars extra a month.
Add this $52.00 onto what you normally pay on your credit card. This will be at least $52.00 plus the minimum you were paying.
Pay this until Card #1 is paid off. Stop making purchases.
Then if you have a second card, you take the $52.00 + Credit Card #1 payment. Let's assume you paid $70.00 a month on Card 1 as your minimum.
Now let's say on Card 2, you now pay the minimum on Card #2 + $52.00 (Cable + Deductible Money) + $70.00 (Previous Minimum on Card #1).
This means you paying $122.00 + the minimum on Card #2. This means you'll pay Card #2 off twice as fast as Card #1.
You snowball the money from canceling one service, you can pay your debts off much more quickly than you could other wise.
Just think if you could cancel two services?
But if you don't have anything big to cancel, try canceling two smaller services.
Also if you haven't switched your car or home insurance in the last four years, shop around, you may be able to cut down those costs even more.
Take the savings you earn on one item and apply it to each new debt until it's paid off. When one debt is paid off, then you add that extra cash to the new debt until it's paid off as well.
Each debt you pay off lets you pay a larger amount on the next debt.
Eventually if you stop spending and don't use this cancel cash for anything but its purpose, you'll eventually dig out from under your debt.
Snowball your way into a debt free life. It won't be easy but it is possible.