Debt often feels like a necessary and overwhelming part of life; bank loans, student loans, business loans, credit cards and other lines of credit have become a part of so many of our financial stories. Though at times it may be difficult to imagine a life without debt, it is important to know that there is always a way out. That way out starts with you changing your mindset around the debt you have. Dave Ramsey is well known for the snowball effect which looks something like this:

Step 1: List your debts from smallest to largest regardless of interest rate.

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.

Sort debt by smallest to largest. Start paying off the smallest amounts first, and then as those smaller items are paid off, take those amounts and start allocating them to the larger amounts. This creates early, quick wins which helps give you more confidence to stay on the path of paying them all off. 

“When in doubt, cross it out.” – Mike Michalowicz