# How To Clear Your Debt And Still Eat

Updated on October 14, 2010

## The Light At The End of the Debt Tunnel

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.

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• Lori J Latimer

8 years ago from The River Valley, Arkansas

Excellent financial advice. It is broken down into a way others can understand.

There is Hulu TV, and others that are free, (watching New Season shows a day later), while being legit. You watch ads that are 15 seconds to 60 seconds. That can save some people over \$100.00 per month. Tons of oldies too. Just an idea. Great Hub. Voted Up - shared.

• TKDenver

8 years ago

Nice hub. You explained the concept very well. I've always been terrible with money, but am doing my best to be better about it!

• AUTHOR

Tirzah Laughs

8 years ago from USA

When this was first explained to me, I thought this is so simple but it makes sense. I've had multiple vet bills and house repairs this year so I'm snowballing my way out of it. :)

• Jaye Denman

8 years ago from Deep South, USA

Very good suggestions. I'm living on a much-reduced, fixed income since retirement. I don't have cable, but my cell phone contract ends soon. I would rather do without a mobile phone than my (cheap) digital house phone, so that money can be saved to begin my "snowball." Debt is so insiduous, and difficult to get rid of when your income shrinks.

• Gypsy Willow

8 years ago from Lake Tahoe Nevada USA , Wales UK and Taupo New Zealand

Excellent suggestions. Clever idea, so easy to be sucked into credit card debt.

• AUTHOR

Tirzah Laughs

8 years ago from USA

I was afraid it was still too confusing. I wanted to explain it in a way that a non-money person such as myself could understand it.

It doesn't work quickly but it does work.

• J. McCoy

8 years ago from CA (originally)

A great hub on something that's very hard to illustrate.

working